ssume that the CAPM is a good description of stock price returns. The market expected return is 7% with 11% volatility and the risk-free rate is 4% . New news arrives that does not change any of these numbers but it does change the expected return of the following stocks: a. At current market prices, wh
ssume that the CAPM is a good description of stock price returns. The market expected return is 7% with 11% volatility and the risk-free rate is 4% . New news arrives that does not change any of these numbers but it does change the expected return of the following stocks: a. At current market prices, wh
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Assume that the
a. At current market prices, which stocks represent buying opportunities?
b. On which stocks should you put a sell order in?
Transcribed Image Text:Complete the table with the alphas below: (Round to one decimal place.)
Expected Return
Volatility
19%
Green Leaf
NatSam
HanBel
Rebecca
Automobile
14%
11%
7%
6%
38%
28%
41%
Beta
1.33
1.87
0.71
1.33
Alpha
%
%
1%
%
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