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Question

The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected return on SDA Corp. common stock is 16%. The beta of SDA Corp. common stock is 1.25. Within the context of the capital asset pricing model, _________.
A. SDA Corp. stock is underpriced
B. SDA Corp. stock is fairly priced
C. SDA Corp. stock's alpha is -.75%
D. SDA Corp. stock alpha is .75%