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

- The stock plots above the security market line.

- The stock is currently underpriced.

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