HMA, Universal, and the market have had the following returns over the past four years: YearMarket HMAUniversal
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Question:
HMA, Universal, and the market have had the following returns over the past four years:
YearMarket HMAUniversal
111%10%12%
27%4%-3%
317%12%21%
4-3%-2%-5%
The risk-free rate is 7 percent. The market risk premium is 5 percent. The expected rate of return on both stocks is 12 percent. Which stock would you purchase?
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