Exhibit 87
Use the Information Below for the Following Problem(S)
You

question 110

Multiple Choice

Exhibit 8.7
Use the Information Below for the Following Problem(S)
You expect the risk-free rate (RFR) to be 4 percent and the market return to be 10 percent. You also have the following information about three stocks.
$\begin{array}{ccccc}\text { Stock } & \text { Beta } & \begin{array}{c}\text { Current } \\\text { Price }\end{array} & \begin{array}{c}\text { Expected } \\\text { Price }\end{array} & \begin{array}{c}\text { Expected } \\\text { Dividend }\end{array} \\\hline \mathrm{A} & 1.5 & \$ 10 & \$ 11.50 & \$ 1.00 \\\mathrm{~B} & 1.1 & \$ 27 & \$ 30 & \$ 0.00 \\\mathrm{C} & 0.8 & \$ 35 & \$ 36 & \$ 1.50\end{array}$

-Refer to Exhibit 8.7.What is your investment strategy concerning the three stocks?

• A) Buy A and B, sell C.
• B) Sell A, B and C.
• C) Sell A and B, buy C.
• D) Buy A , B and C.
• E) Buy A and C , sell B.

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Definitions:

HCl

HCl, or hydrochloric acid, is a strong, corrosive acid commonly used in laboratory and industrial applications, and naturally present in gastric acid to aid in digestion.

Enzymatic Digestion

Enzymatic digestion involves the breakdown of food by enzymes into absorbable substances in the digestive system.

Carbohydrates

Organic compounds consisting of carbon, hydrogen, and oxygen, which serve as a major source of energy for living organisms.

Salivary Glands

Glands in the mouth that produce saliva, which begins the process of digestion and helps protect the mouth from pathogens.