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XYZ Inc. stock price rises from $57 to $61 per share over the next year. The annual return on the benchmark index (S&P 500) has

XYZ Inc. stock price rises from $57 to $61 per share over the next year. The annual return on the benchmark index (S&P 500) has been 9.25% and the short-term T-bill rate has been yielding 3.75% per year over the past 9 years. If XYZ Inc. beta is 0.85, will you purchase the stock?

Yes, because the expected return equals the estimated return.

No, because it is undervalued.

No, because it is overvalued.

Yes, because it is undervalued.

Yes, because it is overvalued.

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