Reward-to-risk ratios for stocks

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Reference no: EM13882044

Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of .7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 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 or overvalued?) and Stock Z is (undervalued or overvalued). (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM13882044

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