The CAPM model finds the expected (required) return on an investment based on its systematic risk. Cox Corp. has a beta of 1.2, the risk- free rate is 2%, and the market risk premium is 7%. Analysts who look at the firm's expected earnings and the current stock price estimate a 12% return for investors. Based on CAPM's risk assessment, and the separate analysts' prediction of a 12% return, is the stock under or over priced? Why?

Group of answer choices

a. overpriced because the required return exceeds the expected return

b. underpriced because the expected return exceeds the required return

c. underpriced because the required return exceeds the expected return

d. overpriced because the expected return exceeds the required return