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The risk-free rate is 5%, and stock X is fairly priced, and it has a beta of 1.5 and expected rate of return of 20%.

The risk-free rate is 5%, and stock X is fairly priced, and it has a beta of 1.5 and expected rate of return of 20%. For another stock Y, the beta is 0.8 and expected return of 14%. Which of the following statement is true about stock Y?

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Y is underpriced

Y is overpriced

Y is fairly priced

none of the above

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