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 Anderson, Inc. 0.90 10.5% Delta Vanlines 1.25 13.0% 1.60 16.0% Nathan's Bakeries Z-man Electronics All of the stocks Delta Vanlines Anderson, Inc. 1.90 19.0% Expected Return O Nathan's Bakeries O Z-man Electronics

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? All of the stocks Delta Vanlines Anderson, Inc. Nathan's Bakeries Z-man Electronics