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Reward-to-risk ratio. The Uptown Investment Club has $50,000 to invest in the equity market. Chandler advocates investing the funds in Monica's Restaurant with a beta
Reward-to-risk ratio. The Uptown Investment Club has $50,000 to invest in the equity market. Chandler advocates investing the funds in Monica's Restaurant with a beta of 1.5 and an expected return of 15.3%. Ross advocates investing the funds in Rachel's Clothing Store with a beta of 1.1 and an expected return of 13.1%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of $25,000 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 3.00% ). Which stock do you select? (Select the best response.) A. The choice is Rachel's Clothing Store based on the higher reward-to-risk ratio 8.20% B. The choice is Rachel's Clothing Store based on the higher reward-to-risk ratio of 9.18%. C. The choice is Monica's Restaurant based on the higher reward-to-risk ratio of 9.18%. D. The choice is Monica's Restaurant based on the higher reward-to-risk ratio11.18\%
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