The following table summarizes the return on a stock in a two$-$state economy:

Scenario Analysis

$\backslash$table$[[$State$,$Probability,Stock Return$],[$Recession$,0\mathrm{.}4,-0\mathrm{.}15],[$Boom$,0\mathrm{.}6,0\mathrm{.}25]]$

The expected return on the S&P $500$ Index is $9\%,$ and the U$.$S$.$ T$-$bill rate is $3\%.$ The stock has a beta of $1\mathrm{.}1.$

A$.(1$ point$)$ What is the expected return on the stock according to the scenario analysis?

Show your calculation steps briefly and clearly.

B$.(1$ point$)$ What is the expected return on the stock according to the CAPM?

Show your calculation steps briefly and clearly.

C$.(1$ point$)$ Determine whether the stock plotted above, on$,$ or below the security market line $($SML$).$ Is the stock overpriced, underpriced, or fairly priced? Briefly explain why.

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