An Investor Is Faced with the Decision of Whether to Invest

question 51

Multiple Choice

An investor is faced with the decision of whether to invest in a stock with an expected return of 14% or a stock in the same industry with an expected 20% return.Which of the following seems most likely?

• A)the 20% stock is a better investment.
• B)the 14% stock is overpriced.
• C)Both stocks will have approximately the same return.
• D)Both stocks are priced correctly given their perceived risk.

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