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Suppose you know the following information about two stocks: Stock Average Monthly Return Annualized Risk-Free Rate Standard Deviation of Monthly Returns A 0.9% 0.6% 2.4%
Suppose you know the following information about two stocks: Stock Average Monthly Return Annualized Risk-Free Rate Standard Deviation of Monthly Returns A 0.9% 0.6% 2.4% B 0.8% 0.6% 1.7% Based on the information in the table, which stock has a higher return? O Stock A O Stock B Based on the information in the table, which stock has a higher level of risk? O Stock A O Stock B There are several ways in which investors can measure a stock's risk. One is to examine the volatility of stock returns by using the reward-to- variability ratio, also known as the Sharpe index. Based on the information in the table, the Sharpe index for stock A is: O 0.0875 O 0.125 O 0.1875 O 0.25 Based on the information in the table, the Sharpe index for stock B is: O 0.0941 O 0.1176 O 0.1529 O 0.2471 Based on the Sharpe ratios, which stock offers more expected excess return per unit of risk? O Stock B O Stock A
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