*Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected retum of 8.7. If these stocks are priced correctly according to the CAPM, what is the risk-free rate? Give your answer in percentage to the nearest basis point.
*Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected retum of 8.7. If these stocks are priced correctly according to the CAPM, what is the risk-free rate? Give your answer in percentage to the nearest basis point.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 1P
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![*Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected
return of 8.7. If these stocks are priced correctly according to the CAPM, what is the risk-free rate? Give
your answer in percentage to the nearest basis point.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe9012384-2c0f-4dea-9812-dd0664f96933%2Fa1c1dd23-3d8a-4435-a5ae-07956dec1c70%2Flmsal3v_processed.jpeg&w=3840&q=75)
Transcribed Image Text:*Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected
return of 8.7. If these stocks are priced correctly according to the CAPM, what is the risk-free rate? Give
your answer in percentage to the nearest basis point.
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