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The stock of a manufacturing company is priced so that its expected rate of return...

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The stock of a manufacturing company is priced so that its expected rate of return is below its required rate, as calculated by the Capital Asset Pricing Model (CAPM). Which of the following will occur in an efficient capital market?

A.

Buying pressure for the firm’s stock will drive the price up.

B.

Buying pressure for the firm’s stock will drive the price down.

C.

Selling pressure for the firm’s stock will drive the price up.

D.

Selling pressure for the firm’s stock will drive the price down.

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