Use the following information to answer questions a)-c).

a) Which one of the above stocks is correctly priced if the risk-free rate of return is 3.2 percent and the market risk premium is 8.4 percent? (Show your calculations)

b) Which ones(one) are(is) underpriced ? (Show your calculations, 3 pts)

c) Which ones(one) are(is) overderpriced ? (Show your calculations, 3 pts)

Risk,Return and Security Market Line

Stocks	Beta	Expected Return
A	.72	8.62%
B	1.46	15.79%
C	1.38	14.79%
D	1.01	12.02%
E	.95	11.40%