Stock Y has a beta of 1.45 and an expected return of 13.50 percent. Stock Z has a beta of .70 and an expected return of 10 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

Stock Y has a beta of 1.45 and an expected return of 13.50 percent. Stock Z has a beta of .70 and an expected return of 10 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

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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