Your broker has developed a list of firms, their betas, and the return he expects the stock to

yield over the next twelve months $($labeled "Expected Return"$).$ You have estimated that the

risk$-$free rate is $5\%$ and the return to the market will be $12\%.$ Assuming that CAPM is

correct, which stock should you purchase?

Firm

Beta Expected

Return

Anderson, Inc. $0\mathrm{.}75,10\mathrm{.}5\%$

Delta Vanlines $1\mathrm{.}2413\mathrm{.}0\%$

Nathan's $,1\mathrm{.}60,16\mathrm{.}0\%$

Bakeries

Z$-$man

$2\mathrm{.}1519\mathrm{.}0\%$

Electronics

All of the stocks

Delta Vanlines

Z$-$man Electronics

Nathan's Bakeries

Anderson, Inc.