Stock X Has a Beta of 0

question 77

Multiple Choice

Stock X has a beta of 0.88 and an expected return of 10.8 percent.Stock Y has a beta of 1.15 and an expected return of 13.1 percent.What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?

• A) 1.10 percent
• B) 1.20 percent
• C) 2.06 percent
• D) 3.30 percent
• E) 3.50 percent

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