Stock X has a beta of 2.5 and an expected return of 22.5%. Stock Y has a beta of 1.5 and an expected return of 15.0 %. Also, the market risk premium is 7.2%. What would be the risk - free rate if these two stocks are correctly priced? (solve with excel)

Stock X has a beta of 2.5 and an expected return of 22.5%. Stock Y has a beta of 1.5 and an expected return of 15.0 %. Also, the market risk premium is 7.2%. What would be the risk - free rate if these two stocks are correctly priced? (solve with excel)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...

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Stock X has a beta of 2.5 and an expected return of 22.5%. Stock Y has a beta of 1.5 and an expected return of 15.0 % .
Also, the market risk premium is 7.2%. What would be the risk - free rate if these two stocks are correctly priced? (solve
with excel)

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