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Assume that the CAPM is a good description of stock price returns. The market expected return is 7 % withm 1 0 % volatility and
Assume that the CAPM is a good description of stock price returns. The market expected return is withm volatility and the riskfree rate is New news arrives that does not change any of these numbers but it does change the expected return of the following stocks:
a Calculate the alpha for each stock in the table.
b At current market prices, which stocks represent buying opportunities? On which stocks should you put a sell order in
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