stocks a, b, and c have identical risks. stock a earns an annual return of 9.9 percent as compared to 9.6 percent returns on stocks b and c. given this, you can correctly assume that:

Based on the fact that Stocks A, B, and C have identical risks and yet Stock A has a higher annual return than Stocks B and C, we can assume that Stock A has a positive excess return.

How are risk and return related?

Generally, a higher amount of risk would give a higher amount of returns. A lower amount of risk would therefore give a lower return.

This means that instruments that have the same risk, should generally give the same return. Stocks A, B, and C have the same risk and yet Stock A has a higher return than the rest, this means that Stock A's return is excess and positive.

Options for this question include:

1. Stock A is overpriced
2. The market return is 9.75 percent
3. Stock A represents the smallest sized firm
4. Stock A has a positive excess return
5. Stocks B and C represent firms that are in progress of merging

Find out more on risk and return at https://brainly.com/question/11541998

#SPJ1