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TIME CRUNCH PLEASE HELP! WILL RATE THANKS! Suppose you investigate the performance of two...

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Finance

TIME CRUNCH PLEASE HELP! WILL RATE THANKS!

Suppose you investigate the performance of two mutual funds. Mutual fund A has returned 12% in the last year with 1.2 Sharp ratio. The second Mutual Fund B, was much more successful in that it returned 24% in the last year with a Sharpe ratio of 0.9. What is your best course of action and its justification?

Group of answer choices

A) Select fund A because it has higher risk-adjusted return.

B) Select fund B because it delivers higher returns than fund A

C) Select fund A because it is probably less risky than fund B as judged by higher Sharpe Ratio

D) Select fund B because its twice as good as A

The risk-free rate is 7%. The expected market rate of return is 15%. If you expect a stock with a beta of 1.3 to offer a rate of return of 12%, you should Group of answer choices

A) buy the stock because it is overpriced.

B) buy the stock because it is underpriced.

C) None of the options, as the stock is fairly priced Key:

D) sell the stock because it is overpriced.

E) sell the stock short because it is underpriced.

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