A stock has a Beta of 127 and an expected return of 7.48%. The risk-free rate is 1.7% What is the reward-to-sisk ratio? E"m) = 7+ [EUM) - 1] ETSTOCK) = 14 + BSTOCK[E(M) - 74] Reward to Risk ratio = [E(TSTOCK) - [t] / BSTOCK oa) 1.27 Ob) 7.23% c) 4.55% d) 5.89% Your Financial Advisor has suggested you buy stock in Technology Gear, Inc. She believes the stock has an expected return of 13.5%. The current expected market return is 11% and the US Treasury Bill has a yield of 3.1%. If the Beta of Technology Gear is 1.56, would you elect to buy this stock? E(TM) = 14 + [EUM) - ] E(TSTOCK) = 14 + BSTOCK[E(TM) 1] - a) No, because the stock is expected to have a return that is less than securities with the same Beta in the current market conditions b) Yes, because this stock is expected to have a return greater than securities with the same Beta in the current market conditions Taylor is considering Investing in a stock that carries a Beta of 2.1. The risk-free rate is 1.75% and the market risk premium is 6%. What should the expected return be on this stock? Erm) = rf + [E(mm) - 1] Elrstock) = rf + Bstock[E(rm) - rt] Reward to Risk ratio = [E(rstock) - rt] / BSTOCK Formula a) 14.35% b) 12.60% c) 6% d) 7.75%