The risk-free rate is 7%. The expected market rate of return is 15%. If you expect a stock with a beta of 1.3 to offer a rate of return of 12%, you should

a.

sell short the stock because it is overpriced.

b.

buy the stock because it is overpriced.

c.

sell the stock short because it is underpriced.

d.

buy the stock because it is underpriced.

e.

None of the options, as the stock is fairly priced