Stock A's beta is 2.1. The risk-free rate is 6%, and the market return is 13%. The expected rate of return of Stock A is 15.5%. Based on the above information, which of the following statements is true?
A. ?An investor should buy Stock A because its expected rate of return is less than the required rate of return.
B. ?An investor should buy Stock A because its expected rate of return is more than the required rate of return.
C. ?An investor should not buy Stock A because its expected rate of return is more than the required rate of return.
D. ?An investor should not buy Stock A because its expected rate of return is less than the required rate of return.
E. ?An investor should be indifferent towards buying or selling the stock.
Answer: D
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