Exhibit 14.11
Use the Information Below for the Following Problem(S)
$\begin{array}{lcc}
\text { Investment } & \text { Beta } & \text { Analyst's Estimated Return } \
\hline \text { Stock } \mathrm{X} & 2.3 & 15.5 \% \
\text { Stock } \mathrm{Y} & 1.2 & 13.6 \% \
\text { Market Portfolio } & 1.0 & 11.5 \%
\end{array}$

-Refer to Exhibit 14.11.Based on the analyst's estimated return and the stocks' betas the analyst should
A) Sell both Stock X and Stock Y
B) Sell Stock X and Buy Stock Y
C) Buy Stock X and Sell Stock Y
D) Buy both Stock X and Stock Y
E) None of the above

Question

Exhibit 14.11
Use the Information Below for the Following Problem(S)
 $\begin{array}{lcc}
\text { Investment } & \text { Beta } & \text { Analyst's Estimated Return } \
\hline \text { Stock } \mathrm{X} & 2.3 & 15.5 \% \
\text { Stock } \mathrm{Y} & 1.2 & 13.6 \% \
\text { Market Portfolio } & 1.0 & 11.5 \%
\end{array}$

-Refer to Exhibit 14.11.Based on the analyst's estimated return and the stocks' betas the analyst should
A) Sell both Stock X and Stock Y
B) Sell Stock X and Buy Stock Y
C) Buy Stock X and Sell Stock Y
D) Buy both Stock X and Stock Y
E) None of the above

Quizplus · Accepted Answer

Stock X's required return,21.3%,is greater than estimated return,15.5%,so Sell X.
Stock Y's required return,13.0%,is less than estimated return,13.6%,so Buy Y.

Exhibit 14 -Refer to Exhibit 14