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Assume that the CAPM s a good description of stock price returns The market expected return is 9% with 10% volatility and the risk-free rate
Assume that the CAPM s a good description of stock price returns The market expected return is 9% with 10% 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 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? Complete the table with the alphas below: (Round to one decimal place.) Expected Return Volatility 23% 33% 26% 31% Beta 1.24 1.87 0.85 1.29 Alpha Green Leaf 12% 12% 9% HanBel Rebecca Automobile Complete the table with the decisions below: (Select from the drop-down menus.) Expected Return Volatility 23% 33% 26% 31% Beta 1.24 1.87 0.85 1.29 Decision Green Leaf 12% 12% 9% 7% HanBel Rebecca Automobile (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet) Expected ReturnVolatility Beta 1.24 1.87 0.85 1.29 Green Leaf NatSam 12% 12% 9% 7% 23% 33% 26% 31% Rebecca Automobile Print none
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