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Assume that the CAPM is a good description of stock price returns. The market expected...

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Finance

Assume that the CAPM is a good description of stock price returns. The market expected return is 7% with 11% volatility and the risk-free rate is 4%. New news arrives that does not change any of these numbers but it does change the expected return of the following stocks:

Expected Return Volatility Beta

Green Leaf 13% 22% 1.64

NatSam 10% 32% 1.61

HanBel 11% 29% 0.64

Rebecca Automobile 6% 30% 1.28

a. At current market prices, which stocks represent buying opportunities?

b. On which stocks should you put a sell order in?

Complete the table with the alphas below: (Round to one decimal place.)

Expected Return Volatility Beta Alpha

Green Leaf 13% 22% 1.64 %

NatSam 10% 32% 1.61 %

HanBel 11% 29% 0.64 %

Rebecca Automobile 6% 30% 1.28 %

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