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.

Question

Quizplus · Accepted Answer

The reward-to-risk ratios differ, indicating that at least two of the stocks are mispriced relative to each other.

Stocks D,E,and F Have Actual Reward-To-Risk Ratios of 7