Stock Y Has a Beta of 1

question 98

Multiple Choice

Stock Y has a beta of 1.28 and an expected return of 13.7 percent.Stock Z has a beta of 1.02 and an expected return of 11.4 percent.What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

• A)2.38 percent
• B)2.76 percent
• C)3.23 percent
• D)3.69 percent
• E)4.08 percent

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