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Reward-to-risk ratio. The Royal Seattle Investment Club has $100,000 to invest in the equity market. Frasier advocates investing the funds in KSEA Radio with a
Reward-to-risk ratio. The Royal Seattle Investment Club has $100,000 to invest in the equity market. Frasier advocates investing the funds in KSEA Radio with a beta of 1.4 and an expected return of 17.9%. Niles advocates investing the funds in Northwest Medical with a beta of 1.1 and an expected return of 16.3%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of $50,000 for each stock. Before you vote, you look up the current risk-free rate (the one-year U.S. Treasury bill with a yield of 3.75%). Which stock do you select? (Select the best response.) O A. The choice is KSEA Radio based on the higher reward-to-risk ratio of 11.41%. OB. The choice is KSEA Radio based on the higher reward-to-risk ratio 13.41%. O C. The choice is Northwest Medical based on the higher reward-to-risk ratio of 11.41%. OD. The choice is Northwest Medical based on the higher reward-to-risk ratio 10.11%
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