Reward-to-risk ratio. The Uptown Investment Club has $50,000 to invest in the equity market. Chandler idvocates investing the funds in Monica's Restaurant with a beta of 1.5 and an expected return of 16.3%. Ross advocates investing the funds in Rachel's Clothing Store with a beta of 1.1 and an expected return of 4.5%. The club is split 50/50 on the two stocks. You are the deciding vote, and you cannot pick a split of 25,000 for each stock. Before you vote, you look up the current risk-free rate (the one-year U.S. Treasury ill with a yield of 3.50%. Which stock do you select? A. The choice is Rachel's Clothing Store based on the higher reward-to-risk ratio of 10.00%. B. The choice is Monica's Restaurant based on the higher reward-to-risk ratio of 10.00%. C. The choice is Rachel's Clothing Store based on the higher reward-to-risk ratio 8.53% D. The choice is Monica's Restaurant based on the higher reward-to-risk ratio 12.00%.

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