Final answer:
The best investment would typically be the one with the highest expected return after accounting for the investor's risk tolerance. Without individual expected returns for each stock, it is not possible to determine the best investment from the provided options.
Step-by-step explanation:
To determine which security would be the best investment, we need to calculate the expected return for each security, considering the risk-free rate and the market risk premium. An investor seeks to maximize returns while minimizing risk. Investments typically offer a tradeoff between expected return and risk. When considering the risk-free rate of 7 percent and a market risk premium of 2 percent, the expected return of any stock would be expressed as the sum of these two percentages if we assume it has the same risk as the market.
Bank accounts tend to have the lowest risk, but also the lowest returns. Bonds carry a higher risk and higher potential returns. Stocks are usually the riskiest investments with the highest potential returns. The rationale here is that higher risk is compensated with higher expected returns, meaning that an investor would require an additional return for taking on additional risk beyond the risk-free rate.
Since the question does not provide the individual expected returns of the five stocks discussed, we cannot determine the best investment without additional information. However, the best investment would typically be the one with the highest expected return that aligns with the investor's risk tolerance.