Stock Y has a beta of 1.8 and an expected return of 18.3 percent. Stock Z has a beta of 1.0 and an expected return of 11.3 percent. If the risk-free rate is 5.6 percent and the market risk premium is 6.6 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 or Overvalued ?) and Stock Z is (Undervalued or Overvalued ?).
(Round your answers to 2 decimal places. (e.g., 32.16))
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- Submitted On 24 Dec, 2014 12:51:39