Stocks D, E, and F Have Actual Reward-To-Risk Ratios of 7.1

question 54

Multiple Choice

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.

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