Question
The expected returns and betas of two stocks A & B are shown in the table below. The expected market return as represented by the
The expected returns and betas of two stocks A & B are shown in the table below. The expected market return as represented by the S&P 500 is 10% and the risk free rate is 5%. Which security would you buy and why?
| Stock | Expected Return | Beta |
| A | 15% | 1.2 |
| B | 16% | 1.8 |
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International Financial Reporting A Practical Guide
Authors: Alan Melville
6th edition
1292200743, 1292200766, 9781292200767, 978-1292200743
