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Stock Y has a beta of 1.5 and an expected retum of 16.1 percent. Stock Z has a beta of 1 and an expected retum

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Stock Y has a beta of 1.5 and an expected retum of 16.1 percent. Stock Z has a beta of 1 and an expected retum of 11.2 percent. If the risk-free rate is 5.5 percent and the market risk premium is 6.5 percent, the reward-to-risk \begin{tabular}{|l|r|r|r|r|r|} \hline ratios for Stocks Y and Z are & 7.07 & and & 5.70 & percent, respectively, Since & pord \\ \hline the SML reward-to-risk is & 6.50 & percent, Stock Y is & undervalued & and Stock Z is \\ \hline \end{tabular} (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, 0.g., 32.16. )

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