Multiple Choice
Stock J has a beta of 1.25 and an expected return of 13 percent. Stock S has a beta of 0.90 and an expected return of 11 percent. What does the risk-free rate have to be for the stocks to be priced correctly relative to each other?
A) 6.15%
B) 3.84%
C) 4.38%
D) 4.95%
E) 5.86%
Correct Answer:
Verified
Correct Answer:
Verified
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