Question: Given the following two stocks A and B Security Expected rate of return 0.12 0.14 Beta 1.2 1.8 If the expected market rate of return
Given the following two stocks A and B Security Expected rate of return 0.12 0.14 Beta 1.2 1.8 If the expected market rate of return is 0.09 and the risk-free rate is 0.05, which security would be considered the better buy and why? A B because it offers an expected excess return of 1.8%. B. B because it offers an expected return of 14%. A because it offers an expected excess return of 1.2%. C. D. B because it has a higher beta. E. A because it offers an expected excess return of 2.2%
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