AAA Company stock has a higher expected rate of return than ZZZ Company stock.All else being equal,you would expect that relative to ZZZ,AAA company stock provides
A)less risk and less liquidity.
B)less risk and more liquidity.
C)more risk and less liquidity.
D)more risk and more liquidity.

Question

Quizplus · Accepted Answer

A higher expected rate of return usually implies a higher level of risk. Therefore, AAA Company stock is expected to be riskier than ZZZ Company stock. As for liquidity, it is not necessarily related to the expected rate of return, so we cannot assume anything about it.

AAA Company Stock Has a Higher Expected Rate of Return