WHICH stock is undervalued based on CAPM?

Which stock is overvalued based on CAPM?

Based on the CAPM, which stock would you recommend to someone with a well-diversified portfolio?

Q10. You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: Security E(R) stdev correl Beta Firm A 9% 0.20 Q7 0.80 Firm B 12% Q8 0.40 1.50 Firm C 11% 0.80 0.35 Q9 Market 10% 0.20 Rf asset 4% Which stock(s) is (are) undervalued based on the CAPM? O a Firm A O b. Firm C Oc. Firm B O d. None of the above Oe. All Firms