The stock with the highest expected return

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Reference no: EM131905566

Stock Albatross has a risk-premium of 8 and a beta of 1.25. Stock Herring has a risk-premium of 6.4 and a beta of 1. Based on these numbers, you should prefer:

We need to know the variance before we can pick between the two.

Herring because the reward-to-risk ratio is smaller.

Neither because the reward-to-risk ratio is same.

Albatross because the reward-to-risk ratio is smaller.

Albatross because we always want the stock with the highest expected return.

Reference no: EM131905566

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