The market rate of return is 11% and the risk-free rate of return is 4%. Treynak stock has 3% more risk than the market return and has an actual return of 11%.

The Stock:

a. is underpriced

b. is correctly priced

c. will plot below the security market line

d. will plot on the security market line

e. will plot to the left of the security market line graph

please explain why