XYZ Company is considering selling treasury stock but is concerned about the amount of
capital it will raise given the current high volatility of the stock market. What is the BEST
strategy a firm can employ to reduce its uncertainty?
The stock of a manufacturing company is priced so that its expected rate of return is below
its required rate, as calculated by the Capital Asset Pricing Model (CAPM). Which of the
following will occur in an efficient capital market?