Stock X has a beta of .88 and an expected return of 10.8%. Stock Y has a beta of 1.15 and an expected return of 13.1%. What is the risk-free rate of return assuming that both Stock X and Stock Y are correctly priced?
A) 1.10%
B) 1.20%
C) 2.06%
D) 3.30%
E) 3.50%
Correct Answer:
Verified
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