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Question
Stocks D, E, and F have actual reward-to-risk ratios of 7.1, 6.8, and 7.4, respectively. Given this, you know for certain that:A. stock E is preferable to stock F.
B. stock D has a higher beta than stock F.
C. the market risk premium is greater than 6.8 and less than 7.4.
D. stock F is riskier than stock D.
E. at least two of the securities are mispriced.
Answer
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