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17 August, 11:41

The reward-to-risk ratio for stock A is less than the reward-to-risk ratio of stock B. Stock A has a beta of 0.82 and stock B has a beta of 1.29. This information implies that:

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  1. 17 August, 14:42
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    According to the question, the reward - to - risk ratio for the stock A is lesser than that of the Stock B.

    The beta values for both the stock is given as -

    Stock A = 0.82

    and,

    Stock B = 1.29,

    From the above information, it can be implied that either stock B is under price or the stock A is overpriced, or both.

    Since, in the above case the absolute sense can not be determined and only the judgement can be made.
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