Underpriced stocks can be ranked using the excess return ratio, which is calculated as the Market price/Risk free rate.

Name: Underpriced stocks can be ranked using the excess return ratio, which is calculated as the Market price/Risk free rate.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The excess return ratio is calculated as the Expected return - Risk-free rate, not the Market price/Risk-free rate. Therefore, underpriced stocks may be ranked using the excess return ratio, but it is not calculated in the manner described in the statement.

Underpriced Stocks Can Be Ranked Using the Excess Return Ratio