I need help with questions number seven and ten. Answering will give you 28 pts
1 answer:
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Answer:
Both the stock have the same expected return.
Step-by-step explanation:
In year 1 the return earned by stocks A and B are:
Stock A = 2% return
Stock B = 9% return
In year 2 the return earned by stocks A and B are:
Stock A = 18% return
Stock B = 11% return
Compute the expected return for stock A as follows:
Compute the expected return for stock B as follows:
Thus, both the stock have the same expected return.