How Do You Explain a Stock That Earns a Return

question 63

Essay

How do you explain a stock that earns a return higher than the required rate of return from the CAPM?

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Definitions:

Subcontracting

The practice of hiring an external organization to perform some of a company's work, rather than doing it in-house.

Plant Capacity

The maximum output that a manufacturing facility can produce under normal conditions over a certain time period.

Aggregate Planner

A methodology used in manufacturing to determine optimal production levels, inventory levels, and workforce levels, considering various factors over a medium-term horizon.

Inventory

The total amount of goods or materials held in stock by a business or organization.