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Suppose you know the following information about two stocks: Stock Average Monthly Return 1.1% B 1% Annualized Risk-Free Rate Standard Deviation of Monthly Returns 0.4%

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Suppose you know the following information about two stocks: Stock Average Monthly Return 1.1% B 1% Annualized Risk-Free Rate Standard Deviation of Monthly Returns 0.4% 2.4% 0.4% 2.2% Based on the information in the table, which stock has a higher return? Stock A Stock B Based on the information in the table, which stock has a higher level of risk? Stock A 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 0.1458 O 0.2917 O 0.4375 O 0.5833 Based on the Information in the table, the Sharpe index for stock B is: O 0.1636 O 0.2727 O 0.3545 O 0.5727 Based on the Sharpe ratios, which stock offers more expected excess return per unit of risk? O Stock A Stock B

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