Two Stocks, a and B, Have Expected Returns for One $- 10 \%$

question 9

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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