The market risk premium is 8%. The risk-free rate is 5%. Suppose you expect a stock with a beta of 0.80 to offer a rate of return of 12%. According to the CAPM, you should:

Select one:

a. buy the stock because it is overpriced.

b. sell the stock short because it is underpriced.

c. sell short the stock because it is overpriced.

d. buy the stock because it is underpriced.