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

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Stock Y has a beta of 1.3 and an expected return of 15.3 percent. Stock Z has a beta of 0.70 and an expected return of 9.3 percent.

Oct 23rd, 2014

15.3-Rf/1.3=9.3-Rf/0.70 this would equal to .70(15.3-Rf)=1.3(9.3-Rf). When you solve for it it the answer is 2.3%

Oct 24th, 2014

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Oct 23rd, 2014
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Oct 23rd, 2014
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