Consider the following information on Stocks I and II: Probability of State of Rate of Return...
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Consider the following information on Stocks I and II: Probability of State of Rate of Return if State Occurs State of Economy Recession Normal Irrational exuberance Economy 0.45 0.25 0.30 Stock I 0.03 0.35 0.29 Stock II -0.28 0.14 0.45 The market risk premium is 12 percent and the risk-free rate is 6 percent. a-1. What is the beta of each stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Stock I Stock II Beta a-2. Which stock has the most systematic risk? O Stock I Stock II b-1. What is the standard deviation of each stock? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to Stock I Stock II Standard Deviation % % Consider the following information on Stocks I and II: Probability of State of Rate of Return if State Occurs State of Economy Recession Normal Irrational exuberance Economy 0.45 0.25 0.30 Stock I 0.03 0.35 0.29 Stock II -0.28 0.14 0.45 The market risk premium is 12 percent and the risk-free rate is 6 percent. a-1. What is the beta of each stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Stock I Stock II Beta a-2. Which stock has the most systematic risk? O Stock I Stock II b-1. What is the standard deviation of each stock? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to Stock I Stock II Standard Deviation % %
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