Risk-free rate-market risk premium

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Stock Y has a beta of 1.35 and an expected return of 15 percent. Stock Z has a beta of 0.8 and an expected return of 11.8 percent.

Required:

If the risk-free rate is 5.3 percent and the market risk premium is 7.8 percent, are these stocks correctly priced?

Reference no: EM13947320

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