Under the Following Conditions, What Are the Expected Returns for Stocks

question 47

Multiple Choice

Under the following conditions, what are the expected returns for stocks X and Y? $$\begin{array} { l l } \lambda ^ { 0 } = 0.04 & b _ { x , 1 } = 1.2 \\k _ { 1 } = 0.035 & b _ { x , 2 } = 0.75 \\k _ { 2 } = 0.045 & b _ { y , 1 } = 0.65 \\& b _ { y , 2 } = 1.45\end{array}$$

• A)11.58% and 12.8%
• B)15.65% and 18.23%
• C)13.27% and 15.6%
• D)18.2% and 16.45%
• E)None of the above