Question $2$

Suppose you had $$2,000$ to invest for the next year and were considering two stocks. Your analysis shows that stock A is expected to increase by $$200$ per share next year and costs $$200$ per share, while stock B by is expected to increase by $$50$ per share next year and costs $$500$ per share. Which is the better deal and why?

Stock A because it has a lower relative rate of return.

Stock B because it has a lower relative rate of return.

Stock A because it has a higher relative rate of return.

Stock $B$ because it has a higher relative rate of return.