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A. Which one of the following stocks is correctly priced if the risk-free rate of return is 4.5 percent and the market risk premium is
A. Which one of the following stocks is correctly priced if the risk-free rate of return is 4.5 percent and the market risk premium is 9.0 percent?
Stock | Beta | Expected Return |
---|---|---|
A | .89 | 12.51% |
B | 1.61 | 12.77 |
C | 1.42 | 11.39 |
D | 1.45 | 12.11 |
E | .95 | 8.65 |
B. A stock has a beta of .92 and an expected return of 8.57 percent. If the risk-free rate is 2.8 percent, what is the stock's reward-to-risk ratio?
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