You have been scouring The Wall Street Journal looking for stocks that are "good values" and have calculated the expected returns for five stocks. Assume the risk-free rate (rRF) is 7 percent and the market risk premium (rM - rRF) is 2 percent. Which security would be the best investment? (Assume you must choose just one).

Expected Return Beta

a. 9.01% 1.70

b. 7.06% 0.00

c. 5.04% -0.67

d. 8.74% 0.87

e. 11.50% 2.50

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