Stock X has a beta of 1.02 and an expected return of 11.8 percent.Stock Y has a beta of 1.15 and an expected return of 13.1 percent.What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?
A) 1.10 percent
B) 1.60 percent
C) 2.06 percent
D) 3.30 percent
E) 3.50 percent
Correct Answer:
Verified
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