Suppose that you are a trader at the stock market.T-Mobile’s stocks currently trade at $45 and the expectedreturn is 9%. You have information that leads you to believethat by the end of year the company’s returns will bearound 40%. Are your expectations optimal? How will yourbehavior influence the stock price?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 11P
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Suppose that you are a trader at the stock market.
T-Mobile’s stocks currently trade at $45 and the expected
return is 9%. You have information that leads you to believe
that by the end of year the company’s returns will be
around 40%. Are your expectations optimal? How will your
behavior influence the stock price?

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