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What would the risk-free rate have to be

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Question - Stock Y has a beta of 1.2 and an expected return of 11.4 percent. Stock Z has a beta of .80 and an expected return of 8.06 percent. If the risk-free rate is 2.5 percent and the market risk premium is 7.2 percent, are these stocks correctly priced?

In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced?

Reference no: EM133172942

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