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

question 123

Multiple Choice

Under the following conditions, what are the expected returns for stocks Y and Z?

$\begin{array}{ll}\lambda^{0}=0.05 & b_{y, 1}=0.75 \\k_{1}=0.06 & b_{y, 2}=1.35 \\k_{2}=0.05 & b_{z, 1}=1.5 \\& b_{z, 2}=0.85\end{array}$

• A) 17.61% and 13.23%
• B) 16.25% and 18.25%
• C) 13.24% and 28.46%
• D) 14.83% and 17.69%
• E) None of the above

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