Assume that the CAPM is a good description of stock price returns. The market expected return is

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Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 8% 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:

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a. At current market prices, which stocks represent buying opportunities?

b. On which stocks should you put a sell order in?

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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