Assume that the CAPM is a good description of stock price returns. The market expected...
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Assume that the CAPM is a good description of stock price returns. The market expected return is 7% with 11% 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.) Alpha Beta 1.26 Green Leaf Expected Return 10% 10% 11% Volatility 22% 43% 32% 32% Natsam HanBel Rebecca Automobile 2.12 0.83 1.16 7% Complete the table with the decisions below: (Select from the drop-down menus.) Expected Return Beta Decision Volatility 22% Green Leaf 10% 1.26 NatSam 10% 43% 2.12 HanBel 11% 32% 0.83 1.16 Rebecca Automobile 7% 32% O Expected Return 10% 10% Green Leaf NatSam HanBel Rebecca Automobile Volatility 22% 43% 32% 32% Beta 1.26 2.12 0.83 1.16 11% 7%
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