You believe that Alpha stock which has a beta of 1.5 will return 12.0% this coming year. The market is expected to return 11% and T-bills return 5%. According to CAPM, which one of these statements is correct given this information?

• The stock is currently underpriced.

• The risk premium is around zero given the stock's beta.

• The stock plots above the security market line.

• The stock plots to the right of the point of the market portfolio on a security market line graph.