Stock Y has a beta of 1.6 and an expected return of 16.6 percent. Stock Z has a beta of 8 and an expected return of 9.4 percent. If the risk-free rate is 5.1 percent and the market risk premium is 6.6 percent, the reward-to-risk ratios for Stocks Y and Z are percent, respectively. Since and the SML reward-to-risk is percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Stock Y has a beta of 1.6 and an expected return of 16.6 percent. Stock Z has a beta of 8 and an expected return of 9.4 percent. If the risk-free rate is 5.1 percent and the market risk premium is 6.6 percent, the reward-to-risk ratios for Stocks Y and Z are percent, respectively. Since and the SML reward-to-risk is percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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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Transcribed Image Text:Stock Y has a beta of 1.6 and an expected return of 16.6 percent. Stock Z has a beta of 8 and an expected
return of 9.4 percent. If the risk-free rate is 5.1 percent and the market risk premium is 6.6 percent, the reward-to-risk
ratios for Stocks Y and Z are
percent, respectively. Since
and
the SML reward-to-risk is
percent, Stock Y is
and Stock Z is
(Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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