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06-03-2020
Business

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Stock A has a required return of 19%. Stock B has a required return of 11%. Assume a risk-free rate of 4.75%. Which of the following is a correct statement about the two stocks. Stock A is riskier. Stock B is riskier. The stocks have the same risk. We would need to know if the markets are efficient to answer this question.

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abidhussain7972 abidhussain7972

07-03-2020

Answer:

Stock A is riskier.

Explanation:

Answer : Stock A is riskier because Risk premium of Stock A i.e. 19% - 4.75%= 14.25% is greator than Risk premium of Stock B i.e. 11% - 4.75% = 6.25%.

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