Orako Inc. prepared information about two investment opportunities as presented below. Compute followings for each asset....

   

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Orako Inc. prepared information about two investment opportunities as presented below. Compute followings for each asset. Asset A Asset B Rate of Return 10% Probability 30% Rate of Return Probability 5% 40% 15 40 15 20 20 30 25 40 Required: (i) Expected rate of return. (ii) Standard deviation of expected return. (iii) Coefficient of variation of returns (4 marks) (6 marks). (4 marks) (iv) Based on your calculation, which asset do you recommend to invest? (2 marks) (b) Apital Inc. has a beta of 2. The risk-free rate is 6 percent, and market return is 16 percent. Required: (i) What is risk premium on Apitl stock? (ii) What is the required return on Apital stock? (iii) What is the cost of common stock equity? (3 marks) (3 marks) (3 marks) Orako Inc. prepared information about two investment opportunities as presented below. Compute followings for each asset. Asset A Asset B Rate of Return 10% Probability 30% Rate of Return Probability 5% 40% 15 40 15 20 20 30 25 40 Required: (i) Expected rate of return. (ii) Standard deviation of expected return. (iii) Coefficient of variation of returns (4 marks) (6 marks). (4 marks) (iv) Based on your calculation, which asset do you recommend to invest? (2 marks) (b) Apital Inc. has a beta of 2. The risk-free rate is 6 percent, and market return is 16 percent. Required: (i) What is risk premium on Apitl stock? (ii) What is the required return on Apital stock? (iii) What is the cost of common stock equity? (3 marks) (3 marks) (3 marks)