Question: Given Are The Following Two Stocks A And B: Beta Security A B Expected Rate Of Return 0.12 0.14 1.2 1.8 If The Expected Market Rate Of Return Is 0.09 And The Risk-free Rate Is 0.05, Which Security Would Be Considered The Better Buy And Why? Choose Your Answer And Show Your Calculations. A) Security A, Because It Offers An Expected Excess Return Of 1.2%. …

Given are the following two stocks A and B: Beta Security A B Expected rate of return 0.12 0.14 1.2 1.8 If the expected market rate of return is 0.09 and the risk-free rate is 0.05, which security would be considered the better buy and why? Choose your answer and show your calculations. A) Security A, because it offers an expected excess return of 1.2%. B) Security B, because it offers an expected excess return of 1.8% C) Security A, because it offers an expected excess return of 2.2% D) Security B, because it offers an expected return of 14% E) Security B, because it has a higher beta B. Fixed Income Valuation (5 points) Will the yield-to-maturity of a fixed income security be always equal to your realized return, given all the promised cash flows (coupons and principle) are paid fully and on the promised day. Explain briefly