Two stocks with the same expected cash flow one period from


Two stocks with the same expected cash flow one period from today (after which both stocks will be worthless) of $100 have different levels of systematic risk. Stock A has 1.2 units of systematic risk and is priced at $85 per share while stock B has 1.5 units of systematic risk and is priced at $87 per share. Briefly describe whether the situation described is a reasonable situation, and why or why not.

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Financial Management: Two stocks with the same expected cash flow one period from
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