Stock X has a beta of 1.15 and an expected return of 11.1 percent. Stock Y has a beta of 1.2 and an expected return of 11.5 percent. What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?

Stock X has a beta of 1.15 and an expected return of 11.1 percent. Stock Y has a beta of 1.2 and an expected return of 11.5 percent. What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 1P

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Question

Stock X has a beta of 1.15 and an expected return of 11.1 percent. Stock Y has a beta of 1.2 and an expected return of 11.5 percent. What is the risk - free rate of return
assuming that both stock X and stock Y are correctly priced?

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