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Stock S has an expected return of 11%, a beta of 1.6. Stock K has an expected return of 12%, a beta of 0.8. The
Stock S has an expected return of 11%, a beta of 1.6. Stock K has an expected return of 12%, a beta of 0.8. The risk free rate is 3%.
a.Stock S's reward-to-risk ratio is
b. Stock K's reward-to-risk ratio is
c. Due to the difference in the two reward-to-risk ratios, expected return of Stock S will go (up/dowm/unchanged), expected return of Stock K will go (up/dowm/unchanged)
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