CFAI Mock Question 24 Portfolio Management - Is the answer wrong?

Question 24 Morning Exam for CFAI.

Answer “Accoridng to CAPM, expected return of PSMG = 2% + 1.2 (12%-2%) or 12%. Because expected return is also 12%, stock is fairly valued.”

When i calculated that, I get 14%?

Yes, you are right. This was one of the answers posted/corrected in the Errata.

Yes the answer is B.