Assume thatthe CAPM is a good description of stock returns. The market expected return is 8 percent and the risk-free rate is 3 percent. New news arrives that does not change any ofthese numbers, but it does change the expected returns of the following stocks: which of the following stocks represent buying opportunities? ‘I . Taggart Transcontinental 2. Rearden Metal 3. Wyatt Oil 4. Nieison Motors 0 ‘i and 2 only 0 2 and 3 only 0 ‘i only © 2 and 4 only
Assume thatthe CAPM is a good description of stock returns. The market expected return is 8 percent and the risk-free rate is 3 percent. New news arrives that does not
change any ofthese numbers, but it does change the expected returns of the following stocks: which of the following stocks represent buying opportunities?
‘I . Taggart Transcontinental 2. Rearden Metal 3. Wyatt Oil 4. Nieison Motors 0 ‘i and 2 only
0 2 and 3 only
0 ‘i only © 2 and 4 only