Stock Y has a beta of 1 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected return of 9 percent. If the risk-free rate is 5.8 percent and the market risk premium is 6.8 percent, the reward-to-risk 5.33 percent, respectively. Since ratios for Stocks Y and Z are 7.70 and the SML reward-to-risk is 6.80 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 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected return of 9 percent. If the risk-free rate is 5.8 percent and the market risk premium is 6.8 percent, the reward-to-risk 5.33 percent, respectively. Since ratios for Stocks Y and Z are 7.70 and the SML reward-to-risk is 6.80 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.)
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 Y has a beta of 1 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected
return of 9 percent. If the risk-free rate is 5.8 percent and the market risk premium is 6.8 percent, the reward-to-risk
5.33 percent, respectively. Since
ratios for Stocks Y and Z are
7.70
and
the SML reward-to-risk is
6.80 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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3631fdc4-a6f8-45b4-b882-1af2b93e9727%2Fa61c70b6-14d6-4a25-83d0-d751df4830ca%2F2j0kasj_processed.png&w=3840&q=75)
Transcribed Image Text:Stock Y has a beta of 1 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected
return of 9 percent. If the risk-free rate is 5.8 percent and the market risk premium is 6.8 percent, the reward-to-risk
5.33 percent, respectively. Since
ratios for Stocks Y and Z are
7.70
and
the SML reward-to-risk is
6.80 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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