119. The following table shows data for the stock of JKU and a market-index.
Expected return of JKU 15%
Expected return of market index 12%
Risk free rate 5%
Standard deviation of JKU returns 20%
Standard deviation of market index returns 15%
Correlation of JKU and market index returns 0.75
Based on the capital asset pricing model (CAPM), JKU is most likely:
A. overvalued.
B. undervalued.
C. fairly valued.
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