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. Stock Y has a beta of 1.2 and an expected return of 12.4 percent. Stock Z has a beta of 0.8 and an expected

. Stock Y has a beta of 1.2 and an expected return of 12.4 percent. Stock Z has a beta of 0.8 and an expected return

of 8.6 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

A. 4.00%

B. 1.00%

C. 2.00%

D. 3.00%

E. 1.90%

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