Stocks A, B, and C Have Identical Risks

Multiple Choice

Stocks A, B, and C have identical risks. Stock A earns an annual return of 9.9 percent as compared to 9.6 percent returns on stocks B and C. Given this, you can correctly assume that:

A) stock A is overpriced.
B) the market return is 9.75 percent.
C) stock A represents the smallest sized firm.
D) stock A has a positive abnormal return.
E) stocks B and C represent firms that are in the process of merging.