You Are Looking to Invest in One of Three Stocks

question 57

Multiple Choice

You are looking to invest in one of three stocks. All other things being equal, Stock A has high expected earnings growth, stock B has only modest expected earnings growth, and stock C is expected to generate poor earnings growth. According to LaPorta's 1996 study, which stock is likely to generate the greatest alpha for you?

• A) Stock A
• B) Stock B
• C) Stock C
• D) The answer cannot be determined from the information given.

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Definitions:

Time-Bound

Relating to objectives or initiatives that have a specific duration or deadline by which they must be achieved or completed.

Motivation

is the psychological drive or force that prompts an individual to act in a certain way to achieve specific goals or satisfy needs.

SMART Goal

A framework for setting objectives that are Specific, Measurable, Achievable, Relevant, and Time-bound, facilitating clear and attainable goal-setting.

Specific

Pertaining to a distinct or particular item, characteristic, or quality, clearly defined or identified.