Design Interior's Stock Has an Expected Return of 10% and a Beta

Multiple Choice

Design Interior's stock has an expected return of 10% and a beta of 1.1. The market return is 9.5% and the risk-free rate is 2.0%. This stock is ________ because the CAPM return for the stock is ________%.

A) greatly overvalued; 13.45
B) slightly overvalued; 10.25
C) priced correctly; 9.5
D) slightly undervalued; 10.25
E) greatly undervalued; 13.45