Problem 11-19 Reward-to-Risk Ratios [LO 4] Stock Y has a beta of 1.35 and an expected return of 13.0 percent. Stock Z has a beta of .80 and an expected return of 10.5 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Risk-free rate
Problem 11-19 Reward-to-Risk Ratios [LO 4] Stock Y has a beta of 1.35 and an expected return of 13.0 percent. Stock Z has a beta of .80 and an expected return of 10.5 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Risk-free rate
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Problem 11-19 Reward-to-Risk Ratios [LO 4]
Stock Y has a beta of 1.35 and an expected return of 13.0 percent. Stock Z has a beta of .80 and an expected return of 10.5 percent.
What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Risk-free rate
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Transcribed Image Text:Problem 11-19 Reward-to-Risk Ratios [LO 4]
Stock Y has a beta of 1.35 and an expected return of 13.0 percent. Stock Z has a beta of .80 and an expected return of 10.5 percent.
What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Risk-free rate
%
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