Question: help, are these correct? i got two different answers Consider the following information about Stocks I and II Rate of Return if State Occurs State
Consider the following information about Stocks I and II Rate of Return if State Occurs State of Probability of Economy State of Economy Stock Stock Il Recession 30 05 - 30 Normal 45 22 10 Irrational exuberance 25 05 .50 The market risk premium is 6 percent and the risk-free rate is 2 percent. (Do not round intermediate calculations. Round your answers to 2 decimal places, e9, 32.16. Enter your return answers as a percent.) The standard deviation on Stock I's return is 8.46 percent, and the Stock I beta is 178. The standard deviation on Stock Il's return is 29.50 percent, and the Stock Il beta is 1.00Therefore, based on the stock's systematic risk/beta, Stock is "riskier
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
