Your broker has developed a list of firms, their betas, and the return he expects the stock to yield over the next twelve months (labeled "expected return"). you have estimated that the risk-free rate is 5% and the return to the market will be 12%. assuming that capm is correct, which stock should you purchase? firm beta expected return
anderson, inc. 0.90 10.5%
delta vanlines 1.24 13.0%
nathan's bakeries 1.50 16.0%
z-man electronics 2.15 19.0%