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Business, 04.07.2020 01:01 wqijviquyuivqwy9672

Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 12% volatility and the risk-free rate is 3%. New news arrives that does not change any of these numbers, but it does change the expected returns of the following stocks: Stock Expected Return Volatility Beta
Taggart Transcontinental 8% 28% 1.2
Rearden Metal 13% 40% 1.7
Wyatt Oil 7% 20% 0.8
Nielson Motors 10% 32% 1.3
Which of the following stocks represent buying opportunities?
1.Taggart Transcontinental
2. Rearden Metal
3. Wyatt Oil
4. Nielson Motors
a) 1 only
b) 2 & 4 only
c) 1 & 2 only
d) 2 & 3 only

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Answers: 3

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