Exhibit 7-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 87

Multiple Choice

Exhibit 7-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
You expect the risk-free rate (RFR) to be 3% and the market return to be 8%. You also have the following information about three stocks. $$\begin{array} { c c c c c } \text { STOCK } & \text { BETA } & \begin{array} { c } \text { CURRENT } \\\text { PRICE }\end{array} & \begin{array} { c } \text { EXPECTED } \\\text { PRICE }\end{array} & \begin{array} { c } \text { EXIPECTED } \\\text { DIVIDEND }\end{array} \\\hline \mathbf { X } & 1.25 & \$ 20 & \$ 23 & \$ 1.25 \\\mathbf { Y } & 1.50 & \$ 27 & \$ 29 & \$ 3.25 \\\mathbf { Z } & 0.90 & \$ 35 & \$ 38 & \$ 1.00\end{array}$$
-Refer to Exhibit 7-2. 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.

Recognize the difference between automatic and deliberate thinking systems.

Understand the concept and examples of mental shortcuts (heuristics).

Explain the effects of cognitive biases on interpersonal attributions and self-perception.

Describe the developmental aspects of cognitive structures and their role in understanding.

---

Definitions:

Finite Population

A population set that contains a limited number of observations or elements.

Average Service Time

The mean time it takes to serve a customer or complete a process, a critical metric in evaluating the performance of a service system.

Time Between Service

The period or interval between successive services rendered to customers or maintenance of equipment.

Service Factor

A multiplier used in operational and manufacturing settings to account for potential variability in demand or system overload capacity.