The reward to risk ratios are given below:
1.
Stock Y=(13.05%-5%)/1=8.05%
2.
Stock Z=(8%-5%)/0.6=5%
Problem 12-12 Relative Valuation (LO3, CFA2) Stock Y has a beta of 1.00 and an expected return of 13.05 percent. Stock Z has a beta of 0.60 and an expected return of 8 percent. If the risk-free rate...
Problem 12-12 Relative Valuation (LO3, CFA2) Stock Y has a beta of 1.00 and an expected return of 15.50 percent. Stock Z has a beta of 0.80 and an expected return of 7 percent. It the risk-free rate is 4.0 percent and the market risk premium is 8.6 percent, what are the reward-to-risk ratios of Y and Z? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places) Reward-to-Risk Ratio Stock Y Stock Z
tock Y has a beta of 1.4 and an expected return of 17 percent. Stock Z has a beta of .7 and an expected return of 10.1 percent. If the risk-free rate is 6 percent and the market risk premium is 7.2 percent, the reward-to-risk and ratios for Stocks Y and Z are percent, respectively. Since the SML reward-to-risk is percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent...
Stock Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z has a beta of .80 and an expected return of 7.85 percent. If the risk-free rate is 2.4 percent and the market risk premium is 7.2 percent, the reward-to-risk ratios for stocks Y and Z are 7.25 and ??????? percent, respectively. Since the SML reward-to-risk is 7.20 percent, Stock Y is undervalued and Stock Z is overvalued (Do not round intermediate calculations and enter...
Stock Y has a beta of 1.30 and an expected return of 15.10 percent. Stock Z has a beta of 0.70 and an expected return of 8 percent. If the risk-free rate is 4.0 percent and the market risk premium is 8.4 percent, what are the reward-to-risk ratios of Y and Z? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) % Answer is complete but not entirely correct. Reward-to-Risk Ratio 0.08 %...
Stock Y has a beta of 1.4 and an expected return of 15.1 percent. Stock Z has a beta of.7 and an expected return of 8.6 percent. If the risk-free rate is 5 percent and the market risk premium is 6.5 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 (Do not round intermediate calculations and enter your answers as a percent rounded...
Stock Y has a beta of 1.2 and an expected return of 14.5 percent. Stock Z has a beta of .7 and an expected return of 9.3 percent. If the risk-free rate is 5.6 percent and the market risk premium is 6.6 percent, the reward-to-risk percent, respectively. Since ratios for Stocks Y and Z are and the SML reward-to-risk is percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent...
Stock Y has a beta of 1.2 and an expected return of 15.3 percent. Stock Z has a beta of 0.8 and an expected return of 10.7 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, the reward-to-risk 7.75 and ratios for stocks Y and Z are 5.88 percent, respectively. Since the SML reward-to-risk is 7.0 percent, Stock Y is undervalued 16 overvalued (Do not round intermediate calculations and Stock Z is points...
roblem 13-18 Reward-to-Risk Ratios (L04) STOCK Y has a beta of 14 and an expected return of 17 percent. Stock Z has a beta of 7 and an expected return of 10.1 percent. If the risk-free rate is 6 percent and the market risk premium is 72 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 (Do not round Intermediate calculations and enter...
Fill in the blanks Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of 7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 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 undervalued and Stock Z is overvalued (Do not round intermediate calculations and...
Stock Y has a beta of 1.4 and an expected return of 13 percent. Stock Z has a beta of 0.85 and an expected return of 10.4 percent. Required: 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 percentage rounded to 2 decimal places (e.g., 32.16).) Risk-free rate % Suggestions: We need to set the reward-to-risk ratios of the...