Given are the following two stocks A and B: 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)A because it offers an expected excess return of 1.2%.
B)B because it offers an expected excess return of 1.8%.
C)A because it offers an expected excess return of 2.2%.
D)B because it offers an expected return of 14%.

Question

Given are the following two stocks A and B:  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)A because it offers an expected excess return of 1.2%. 
B)B because it offers an expected excess return of 1.8%. 
C)A because it offers an expected excess return of 2.2%. 
D)B because it offers an expected return of 14%.

Quizplus · Accepted Answer

The Answer of Given are the following two stocks A and B:  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)A because it offers an expected excess return of 1.2%. 
B)B because it offers an expected excess return of 1.8%. 
C)A because it offers an expected excess return of 2.2%. 
D)B because it offers an expected return of 14%.

Given Are the Following Two Stocks a and B