Suppose you consider buying a share of stock at a price of $70. The stock is expected to pay a dividend of $9 next year and to sell then for $73. The stock risk has been evaluated at = 0.5. c-1. Using the SML, calculate the fair rate of return for a stock with a = 0.5. (Round your answer to 1 decimal place.)

c-2. Calculate the expected rate of return, using the expected price and dividend for next year. (Round your answer to 2 decimal places.)

c-3. Is the stock overpriced or underpriced?

multiple choice

• Underpriced

• Overpriced

Please show all working...