Question: Evaluating risk and return stock x has 10% expected return , a beta coefficient of .9, and 35% standard deviation from expected returns. stock y

Evaluating risk and return stock x has 10% expected return , a beta coefficient of .9, and 35% standard deviation from expected returns. stock y has 12.5% expected return and a beta coefficient of 1.2, and a 25% standard deviation.the risk free rate is 6% and the market risk premium is 5%. a) each stocks coefficient of variation b)which stock is riskier for a diversified investor and why? c) each stocks required rate of return d) on the basis of the two stocks expected and required returns, which stock would be more attrative to a diversified investor? e)calculatet the required return of a portfolio that has $7500 invested in stock x and $2500 invested in stock y. f) if the market risk premium increased to 6% which of the two stocks would have the larger increase in required return ?

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