A Friend Has Information That the Stock of Zip Incorporated

question 24

Multiple Choice

A friend has information that the stock of Zip Incorporated is going to rise from $62.00 to $65.00 per share over the next year. You know that the annual return on the S&P 500 has been 10 percent and the 90-day T-bill rate has been yielding 6 percent per year over the past 10 years. If beta for Zip is 0.9, 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.

---

Definitions:

Geumgangsan

A mountain located in North Korea, considered sacred and famous for its beautiful scenery, historic Buddhist temples, and art.

Jeong Seon

A prominent Korean landscape painter from the Joseon Dynasty, known for his true-view landscape paintings.

Korean Artist

An artist originating from Korea, which has a rich history in various art forms including painting, sculpture, and ceramics, across historical periods.

Symbolic Meaning

The deeper meaning or significance conveyed by an object, figure, or element within a piece of art, literature, ceremony, or other cultural expressions, often not immediately apparent and open to interpretation.