Question

this was a guess. why is this my answer and how do i calculate this quickly either by hand or by graphing calculator?

Reward-to-risk ratio. The Royal Seattle Investment Club has $100,000 to invest in the equity market. Frasier advocates investing the funds in KSEA Radio with a beta of 1.3 and an expected return of 17.2%. Niles advocates investing the funds in Northwest Medical with a beta of 0.9 and an expected return of 14.9%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of $50,000 for each stock. Before you vote, you look up the current risk-free rate (the one-year U.S. Treasury bill with a yield of 3.25%). Which stock do you select? (Select the best response.) A. The choice is Northwest Medical based on the higher reward-to-risk ratio of 12.94%. OB. The choice is KSEA Radio based on the higher reward-to-risk ratio 14.94%. OC. The choice is KSEA Radio based on the higher reward-to-risk ratio of 12.94%. OD. The choice is Northwest Medical based on the higher reward-to-risk ratio 10.73%

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

- 2x Σ AutoSum : A Insert Delete Format Cell Styles Fill 2 Clear Sort & Filter Editing Find & Select Cells U LK LL LM IN ke - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Calibri -11AA = = = Dr Wrap Text General Ea Copy Paste B I U - D SF A Format Painter Merge Merge & Center Center $ - % % 4:0 .00 8.9 Conditional Format Formatting as Table Clipboard Font Alignment Number Styles 154 - for LB LC LD LE LG LH D 39 40 REWARD TO RISK RATIO = 41 42 REWARD TO RISK RATIO = (Rp-Rf) / beta 43 44 KSEA RADIO = (0.172 -0.0325)/1.3 10.73% Rp = 17.2%, Rf = 3.25%, beta = 1.3 45 Rp = 14.9%, Rf = 3.25%, beta = 0.9 NORTHWEST MEDICAL = (0.149-0.0325)/0.9 12.94% 48 49 ANSWER THE CHOICE IS NORTHWEST MEDICAL BASED ON THE HIGHER REWARD TO RISK RATIO OF 12.94% 50 51 52 53 54 55 56 57 K M convexity DGM betaport future INDEX INTL CAP BUD LEASING PV, FV, ANNUITY DIR right clean YIELD bond portfolio KE CAPM UTILITY, SHARPE, beta ferences: AG470 cap stru WACC BOI 130% RESI el - O- Rea ELEB * ENG 29-10-2019