The common stock of KrustyKrab Co. has a beta of 0.87 and an actual expected return of 11.49 percent. The risk-free rate of return is 3.7 percent and the market rate of return is 16.2 percent. Which one of the following statements is true given this information?

Group of answer choices The actual expected stock return indicates the stock is currently underpriced.

The actual expected stock return indicates the stock is currently overpriced.

The stock has more systematic risk than the overall market.

The stock is correctly priced according to CAPM.

The actual expected return will graph above the Security Market Line.