Stock Y has a beta of 1.4 and an expected return of 14.7 percent. Stock Z has a beta of. 7 and an expected return of 8.7 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.2 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 and Stock Z is
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Home » Business » Stock Y has a beta of 1.4 and an expected return of 14.7 percent. Stock Z has a beta of. 7 and an expected return of 8.7 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.