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Stock Y has a beta of 1.4 and an expected return of 16.5 percent. Stock Z has a beta of .7 and an expected return
Stock Y has a beta of 1.4 and an expected return of 16.5 percent. Stock Z has a beta of .7 and an expected return of 9.8 percent. If the risk-free rate is 5.9 percent and the market risk premium is 6.9 percent, the reward-to-risk ratios for stocks Y and Z are ..... and ..... percent, respectively. Since the SML reward-to-risk is ...... percent, Stock Y is undervalued and Stock Z is overvalued.(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal. FIll up the blanks. |
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