You are interested in buying Intel Corp. (INTC) stocks. The beta of INTC is 0.7. The expected return on the market portfolio is 10%, and the T-bill (risk-free) rate is 2%. Based on your analysis, the actual expected return on INTC is 8.1%.

A) What is the expected return on INTC according to the CAPM?

B) Calculate the alpha of INTC. Determine whether INTC is located above, on, or below the security market line (SML). According to the CAPM, would you recommend buying INTC?