Stocks X, Y and Z Have Reward-To-Risk Ratios of 6

question 82

Multiple Choice

Stocks X, Y and Z have reward-to-risk ratios of 6.4, 6.9 and 7.3, respectively. Given an efficient market, you know that:

• A) Stock X is preferred to Stock Y
• B) Stock Z has a higher beta than Stock X
• C) The market risk premium is greater than 6.4, but less than 7.3
• D) Stock Y is riskier than Stock X
• E) At least two of the securities are mis-priced

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