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.

---

Definitions:

Watching News

The activity of consuming news content through various media outlets, such as television, newspapers, or online platforms, to stay informed about current events.

Television

An electronic system for transmitting visual images and sound that are reproduced on screens, primarily used for entertainment, information, and education.

Newspaper

A printed publication, usually issued daily or weekly, containing news, articles, advertisements, and other items of general interest.

Internet

The internet is a global network of computers that provides a vast range of information and communication facilities, including access to websites and the transmission of email and data.