Excel Online Structured Activity: Evaluating risk and return

Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

a$.$ Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.

$C{V}_x=$

$C{V}_y=$

b$.$ Which stock is riskier for a diversified investor?

risky than Stock X$.$

more risky than Stock $x.$

expected returns is more risky. Stock $x$ has the higher standard deviation so it is more risky than Stock $Y.$

more risky than Stock Y$.$

expected returns is more risky. Stock $Y$ has the lower standard deviation so it is more risky than Stock $x.$

c$.$ Calculate each stock's required rate of return. Round your answers to two decimal places.

$r_x=,\%$

$r_y=,\%$

d$.$ On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?

your answer to two decimal places.

$r_p=,\%$

f$.$ If the market risk premium increased to $6\%,$ which of the two stocks would have the larger increase in its required return?Stock X has a $9\mathrm{.}5\%$ expected return, a beta coefficient of $0\mathrm{.}8,$ and a $30\%$ standard deviation of expected returns. Stock Y has a $12\mathrm{.}5\%$ expected return, a beta coefficient of $1\mathrm{.}2,$ and a $30\mathrm{.}0\%$ standard deviation. The risk$-$free rate is $6\%,$ and the market risk premium is $5\%.$ The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.