Recently You Have Received a Tip That the Stock of Buttercup

question 65

Multiple Choice

Recently you have received a tip that the stock of Buttercup Industries is going to rise from $76.00 to $85.00 per share over the next year. You know that the annual return on the S&P 500 has been 13 percent and the 90-day T-bill rate has been yielding 3 percent per year over the past 10 years. If beta for Buttercup is 1.0, will you purchase the stock?

• A) Yes, because it is overvalued.
• B) Yes, because it is undervalued.
• C) No, because it is undervalued.
• D) No, because it is overvalued.
• E) Yes, because the expected return equals the estimated return.

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Definitions:

Job Enlargement

Increasing job breadth by giving employees more tasks at the same level to perform but leaving other core characteristics unchanged.

Job Breadth

The range or variety of tasks and responsibilities that a job encompasses.

Job Depth

The degree of control, responsibility, and discretion an employee has over their work tasks.

Job Design

The process of organizing tasks, duties, and responsibilities into a productive unit of work to enhance job satisfaction and performance.