consider two stocks a and b stock a has an expted return of 10% and a beta of 1.2. stock b has an expected return of 14% and a beta of 1.8. teh expected market rate return is 9% and the risk free rate is 5% security would be considered the better buy because

Stock B as it offers an excess of 1.8%

Explanation:

The better security to buy would be the one that is offering a return higher than what it is supposed to be according to the Capital Asset Pricing Model.

Expected return = Risk-free rate + beta * (Market return - risk free rate)

Stock A

= 5% + 1.2 * (9% - 5%)

= 9.8%

Stock A is meant to be offering 9.8% yet it is offering 10%. The excess return therefore is;

= 10% - 9.8%

= 0.2%

Stock B

= 5% + 1.8 * ( 9% - 5%)

= 12.2%

Stock B is meant to be offering 12.2% yet it is offering 14%. The excess return therefore is;

= 14 - 12.2

= 1.8%

Stock B is therefore the better option.

they can see what that city is producing and to also see if they can some how get that product. like gold in africa.

what are the sentences? so we can answer the question.