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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

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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