USE BED BATH AND BEYOND (BBBY)

4. markets are efficient, explain whether actual returns on the portfolio in B.3 can be higher or lower next year than the current expected return you computed in B.3.

5. What return would you expect on your stock if the market portfolio goes down 30%?
6. Explain how much of the risk of loss that is indicated in B.5 can be diversified away.
7. Explain how a shareholder can diversify away the risk of your company's stock suffering a return that is 50% less than the return computed in B.1.
8. If your company suddenly reports earnings growth of 30% over the past year when investors were expecting 40% growth in earnings, explain whether your stock can be expected to go up or down on the news in an efficient market.