Ask Question
22 July, 15:49

Stock y has a beta of 1.25 and an expected return of 12.6 percent. stock z has a beta of. 8 and an expected return of 9.9 percent. required: what would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (do not round intermediate calculations. enter your answer as a percentage rounded to 2 decimal places (e. g., 32.16).)

+4
Answers (1)
  1. 22 July, 19:18
    0
    Answer: E (Ry) =.041 + (.07) (1.25) = 12.85% >12.6 overvalued E (Rz) =.041 + (.07) (.8) = 9.7% < 9.9% undervalued
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Stock y has a beta of 1.25 and an expected return of 12.6 percent. stock z has a beta of. 8 and an expected return of 9.9 percent. ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers