Stock X Has a Beta of 1

question 45

Multiple Choice

Stock X has a beta of 1.02 and an expected return of 11.8%. Stock Y has a beta of 1.15 and an expected return of 13.1%. What is the risk-free rate of return assuming that both Stock X and Stock Y are correctly priced?

• A)1.10%
• B)1.60%
• C)2.06%
• D)3.30%
• E)3.50%