Two Stocks,A and B,have Expected Returns for One Year Of -

question 13

Multiple Choice

Two stocks,A and B,have expected returns for one year of $- 10 \%$ and $+ 10 \%$ respectively.The stocks have identical prices of $100 each,do not pay dividends,and the one-year risk-free rate of return is 2% in simple terms.The one-year forward prices of the two stocks are:

• A)A: 90;B: 110
• B)A: 92;B: 112
• C)A;102;B: 102
• D)A: 112;B: 112

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Definitions:

Utility

In economics, a measure of satisfaction or happiness that people derive from consuming goods and services.

Divisible

Capable of being divided or separated into smaller parts without losing its inherent qualities or value.

Utils

A hypothetical unit of measurement used in economics to quantify the level of utility or satisfaction derived from consuming goods or services.

Pairs of Socks

Multiple sets of soft foot garments, each set consisting of two items, typically worn for warmth, comfort, or hygiene reasons.