Exhibit 92
Use the Information Below for the Following Problem(S)
Consider

question 24

Multiple Choice

Exhibit 9.2
Use the Information Below for the Following Problem(S)
Consider the three stocks, stock X, stock Y and stock Z, that have the following factor loadings (or factor betas) .
$$\begin{array} { c c c } \text { Stack } & \text { Factor 1 Londine } & \text { Factor } 2 \text { Londing } \\\hline X & - [ .55 & 1.2 \\Y & - [ .10 & 0.85 \\Z & 0.35 & 0.5\end{array}$$
The zero-beta return (??) = 3%, and the risk premia are ?? = 10%, ?? = 8%. Assume that all three stocks are currently priced at $50.
-Refer to Exhibit 9.2.If you know that the actual prices one year from now are stock X $55,stock Y $52,and stock Z $57,then

• A) stock X is undervalued, stock Y is undervalued, stock Z is undervalued.
• B) stock X is undervalued, stock Y is overvalued, stock Z is overvalued.
• C) stock X is overvalued, stock Y is undervalued, stock Z is undervalued.
• D) stock X is undervalued, stock Y is overvalued, stock Z is undervalued.
• E) stock X is overvalued, stock Y is overvalued, stock Z is undervalued.

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Definitions:

Tie-rods

Components in a vehicle's steering system that help transfer the movement from the steering rack or center link to the steering knuckle, thus making the wheels turn.

Power Steering Hoses

High-pressure hoses that convey hydraulic fluid between the power steering pump and the steering gear to assist in vehicle steering.

Pressurized Fluid

Fluid under greater pressure than the surrounding environment, often used in hydraulic systems to transmit power.

Recirculating Ball

A type of steering mechanism in vehicles that uses a series of ball bearings to minimize friction and wear in the steering box.