Stocks A, B, and C Have Identical Risks

question 14

Multiple Choice

Stocks A, B, and C have identical risks. Stock A earns an annual return of 9.9 percent as compared to 9.6 percent returns on stocks B and C. Given this, you can correctly assume that:

• A)stock A is overpriced.
• B)the market return is 9.75 percent.
• C)stock A represents the smallest sized firm.
• D)stock A has a positive abnormal return.
• E)stocks B and C represent firms that are in the process of merging.

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