Stock Y has a beta of 1.50 and an expected return of 16.4 percent. Stock Z has a beta of .95 and an expected return of 12.6 percent.
| Stock |
beta |
Expected return |
| Y |
1.50 |
16.4% |
| Z |
.95 |
12.6% |
| Total |
Risk-Free Rate |
|
What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?
(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Risk-free rate