Given are the following two stocks A and B:

Expected rate of return of stock A: 0.12 , Beta of stock A: 1.2

Expected rate of return of stock B: 0.14 , Beta of stock B: 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? Choose your answer and show your calculations.

A) Security A, because it offers an expected excess return of 1.2%.

B) Security B, because it offers an expected excess return of 1.8%

C) Security A, because it offers an expected excess return of 2.2%

D) Security B, because it offers an expected return of 14%

E) Security B, because it has a higher beta