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Question
Consider two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.2. Stock B has an expected return of 14% and a beta of 1.8. The expected market rate of return is 9% and the risk-free rate is 5%. Security __________ would be considered the better buy because_________.
A. A; it offers an expected excess return of .2%
B. A; it offers an expected excess return of 2.2%
C. B; it offers an expected excess return of 1.8%
D. B; it offers an expected return of 2.4%
Answer
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Related questions
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