Use the Following Information to Answer the Question(s) Below

question 56

Multiple Choice

Use the following information to answer the question(s) below.
Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 12% 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 returns of the following stocks:

-Which of the following stocks represent buying opportunities?
1) Taggart Transcontinental
2) Rearden Metal
3) Wyatt Oil
4) Nielson Motors

• A) 1 only
• B) 1 & 2 only
• C) 2 & 3 only
• D) 2 & 4 only

---

Definitions:

Human Capital

The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.

Physical Capital

Tangible assets such as buildings, machinery, and equipment used in the production of goods and services.

Productivity

The efficiency with which input resources are converted into outputs, often measured as output per hour worked.

Foreign Economies

Economies outside of a reference country or the global network of national economies interacting through international trade.