Given the data below,which is the correct ranking of securities (best to worst)in terms of their relative appeal?
Security A B C
Expected return 8% 20% 40%
Required return 14% 8% 30%
A)A,C,B
B)B,C,A
C)C,B,A
D)C,A,B

Question

Quizplus · Accepted Answer

To determine the relative appeal, we need to compare the expected return with the required return. 
For Security A: 
Expected return (8%) < Required return (14%) - Not appealing 
For Security B: 
Expected return (20%) > Required return (8%) - Appealing 
For Security C: 
Expected return (40%) < Required return (30%) - Not appealing

Therefore, the correct ranking in terms of relative appeal is B, C, A. 
Choice B matches this ranking, so it is the best choice.

Given the Data Below,which Is the Correct Ranking of Securities