Question: Reward-to-Risk Ratios In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced? Stock Y has

Reward-to-Risk Ratios In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced?

Stock Y has a beta of 1.40 and an expected return of 19 percent. Stock Z has a beta of .65 and an expected return of 10.5 percent. If the risk-free rate is 6 percent and the market risk premium is 8.8 percent, are these stocks correctly priced?

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