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The risk-free rate is 6 percent. The market risk premium is 7.2 percent. Stock Y has a beta of 1.4 and an actual expected return
The risk-free rate is 6 percent. The market risk premium is 7.2 percent. Stock Y has a beta of 1.4 and an actual expected return of 17 percent. Stock Z has a beta of .7 and an actual expected return of 10.1 percent. Based on this information, the reward-to-risk ratios for stocks Y and Z areandpercent, respectively. Since the SML reward-to-risk (that correctly reflects the required reward for the amount of systematic risk) is ] percent, Stock Y is Cektoselect.3 and Stock Z is (Cick toselect)3 (Do e calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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