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.)
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 17PROB
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