Consider Two Stocks, a and B

question 14

Multiple Choice

Consider two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.2. Stock B has an expected return of 14% and a beta of 1.8. The expected market rate of return is 9% and the risk-free rate is 5%. Security ________ would be considered the better buy because ________.

• A) A; it offers an expected excess return of .2%
• B) A; it offers an expected excess return of 2.2%
• C) B; it offers an expected excess return of 1.8%
• D) B; it offers an expected return of 2.4%

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Definitions:

Low pH

A condition or measurement indicating that a solution is acidic, with a pH value less than 7.

Vallate Papillae

Big, rounded papillae found at the tongue's rear, playing a role in experiencing flavors.

Otolithic Membrane

A structure in the inner ear that plays a key role in sensing gravity and linear acceleration.

High pH

A condition or environment that has a pH value greater than 7, indicating it is more alkaline or basic.