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  3. you are comparing stock a to stock b. stock a will

You are comparing Stock A to Stock B. Stock A will return 9 percent in...

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Accounting

You are comparing Stock A to Stock B. Stock A will return 9 percent in a boom and 4 percent in a recession. Stock B will return 15 percent in a boom and lose 6 percent in a recession. The probability of a boom is 60 percent while the chance of a recession is 40 percent. Given this information, which one of these two stocks should you prefer and why?

Group of answer choices

Stock A; because it has a higher expected return and appears to be more risky than Stock B

Stock A: because it has a higher expected return and appears to be less risky than Stock B

Stock A; because it has a slightly lower expected return but appears to be significantly less than Stock B

Stock B; because it has a higher expected return and appears to be just slightly more risky than Stock A

Stock B; because it has a higher expected return and appears to be less risky than Stock A

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