Tangshan China's stock is currently selling for $90.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, TangshanChina's most recent dividend was $5.50. If the expected risk free rate of return is 3 percent, the expected market premium is 6 percent, and Tangshan has a beta of 1.2, Tangshan's stock would be ________.

A.overvalued because the resulting share value is higher than the market value

B.undervalued because the market price is less than the resulting share value C.overvalued because the market price is higher than the resulting share value

D.undervalued because the resulting share value is less than the market value

*What should a rational investor do? How will this affect market efficiency?