Question
Alvinn Bear, a security analyst trainee at Stock Move Securities has been assigned to conduct research on three stocks. Details about the three stocks
Alvinn Bear, a security analyst trainee at Stock Move Securities has been assigned to conduct research on three stocks. Details about the three stocks are given below: +6 Risk-free asset return Beta Market risk premium Price as at 31/12/2020 Price as at 31/12/2021 Dividend paid during 2021 Green Food 0.8 9% R160.00 R174.32 R2 3% Light Motors 1.2 12% R82.00 R96.59 R3.2 Solid Cement 1.5 7% R23.000 R24.605 R1 a. As a security analyst, assist Alvinn in determining if there are any mispricing in the three above. stock is stocks (i.e. determine which undervalued/overvalued/fairly valued). b. Given your answers in (a), recommend the appropriate investment strategy (i.e. which stock would you buy/sell/hold). (3) (9)
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