Market risk premium-reward-to-risk ratios for stocks

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Reference no: EM131354398

Stock Y has a beta of 1.4 and an expected return of 14.7 percent. Stock Z has a beta of .7 and an expected return of 8.7 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.2 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, overvalued) and Stock Z is (undervalued, overvalued). (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM131354398

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