What would the risk-free rate have to be for two stocks

Assignment Help Financial Management

Reference no: EM131561404

Stock Y has a beta of 1.30 and an expected return of 13.35 percent. Stock Z has a beta of .50 and an expected return of 8 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Risk-free rate %

Reference no: EM131561404

Questions Cloud

Explain how the fed lowers and raises the federal funds rate : Explain how exchange rates are determined use purchasing power parity. Explain how the Fed lowers and raises the federal funds rate.

Payback period and the rate of return from the investment : A robot cell has been proposed for a certain industrial operation. Determine the payback period and the rate of return from the investment.

What are reward-to-risk ratios : If the risk-free rate is 5.0 percent and the market risk premium is 7.8 percent, what are the reward-to-risk ratios of Y and Z?

Monthly estimates of the required financing or excess funds : Prepare monthly estimates of the required financing or excess funds—that is, the amount of money Bowers will need to borrow or will have available to invest.

What would the risk-free rate have to be for two stocks : What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

What is beta of your portfolio : The betas for the stocks are .8, 1.8, and .7, respectively. What is the beta of your portfolio?

Invest in portfolio containing stock : You have $114,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. how much money will you invest in Stock Y?

What should be the price of the stock today : Lindseys Lab's Stock is expected to pay a dividend (D1) of $1.25 per share at the end of the year. What should be the price of the stock today?

Change in the firm total monthly profits on present value : what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?

User Account

All Pages