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Stocks D, E, and F Have Actual Reward-To-Risk Ratios of 7.1

Question 54

Multiple Choice

Stocks D, E, and F have actual reward-to-risk ratios of 7.1, 6.8, and 7.4, respectively. Given this, you know for certain that:


A) Stock E is preferable to Stock F.
B) Stock D has a higher beta than Stock F.
C) the market risk premium is greater than 6.8 and less than 7.4.
D) Stock F is riskier than Stock D.
E) at least two of the securities are mispriced.

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