Exhibit 82
Use the Information Below for the Following Problem(S)
You

question 47

Multiple Choice

Exhibit 8.2
Use the Information Below for the Following Problem(S)
You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks.
$$\begin{array} { c c c c c } \text { Stack } & \text { Eeta } & \begin{array} { c } \text { Current } \\\text { Price }\end{array} & \begin{array} { c } \text { Expected } \\\text { Price }\end{array} & \begin{array} { c } \text { Experted } \\\text { Dividend }\end{array} \\\hline \mathbf { X } & 1.25 & \$ 20 & \$ 23 & \$ 1.25 \\\mathbf { Y } & 1.50 & \$ 27 & \$ 29 & \$ 0.25 \\\mathbf { Z } & 0.90 & \$ 35 & \$ 38 & \$ 1.00\end{array}$$
-Refer to Exhibit 8.2.What is your investment strategy concerning the three stocks?

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

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for more accurate financial planning and analysis.

Contribution Margin

The difference between sales revenue and variable costs, showing how much revenue contributes to covering fixed costs.

Fixed Budget

A budget that remains constant regardless of changes in the level of activity or volume, typically used for planning purposes.

Variable Costs

Outlays that fluctuate according to the amount of production or volume of sales.