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Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 11% volatility and the risk-free rate
Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 11% volatility and the risk-free rate is 2%. New news arrives that does not change any of these numbers but it does change the expected return of the following stocks
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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