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

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

Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 12% volatility and the risk-free rate is 3%. New news arrives that does not change any of these numbers, but it does change the expected returns of the following stocks:

Stock	Expected Return	Volatility	Beta
Taggart Transcontinental	8%	28%	1.2
Rearden Metal	13%	40%	1.7
Wyatt Oil	7%	20%	0.8
Nielson Motors	10%	32%	1.3

Which of the following stocks represent buying opportunities?

1.   Taggart Transcontinental

2.   Rearden Metal

3.   Wyatt Oil

4.   Nielson Motors

a.) 1 only

b.) 2 & 4 only

c.) 1 & 2 only

d.) 2 & 3 only