The Uptown Investment Club has $50, 000 to invest in the equity market. Chandler advocates investing the funds in Monica's Restaurant with a beta of 1.4 and an expected return of 17.3%. Ross advocates investing the funds in Rachel's Clothing Store with a beta of 0.9 and an expected return of 15.2%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of $25, 000 for each stock. Before you vote, you look up the current risk - free rate (the one year U.S. Treasury bill with a yield of 3.00%). Which stock do you select?
The Uptown Investment Club has $50, 000 to invest in the equity market. Chandler advocates investing the funds in Monica's Restaurant with a beta of 1.4 and an expected return of 17.3%. Ross advocates investing the funds in Rachel's Clothing Store with a beta of 0.9 and an expected return of 15.2%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of $25, 000 for each stock. Before you vote, you look up the current risk - free rate (the one year U.S. Treasury bill with a yield of 3.00%). Which stock do you select?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The Uptown Investment Club has $50, 000 to invest in the equity market. Chandler advocates investing the funds in Monica's Restaurant with a beta of 1.4 and an expected return of 17.3%. Ross advocates investing the funds in Rachel's Clothing Store with a beta of 0.9 and an expected return of 15.2%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of $25, 000 for each stock. Before you vote, you look up the current risk - free rate (the one year U.S. Treasury bill with a yield of 3.00%). Which stock do you select?
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