Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II:...
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Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: Rate of Return if State Occurs Probability of State of State of Economy Economy Stock I Stock Il Recession .20 .04 Normal Irrational exuberance. .60 .26 -.35 15 .20 .10 55 The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal places, e.g., 32.16.) The standard deviation on Stock I's return is deviation on Stock Il's return is percent, and the Stock II beta is stock's systematic risk/beta, Stock riskier percent, and the Stock I beta is The standard Therefore, based on the Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: Rate of Return if State Occurs Probability of State of State of Economy Economy Stock I Stock Il Recession .20 .04 Normal Irrational exuberance. .60 .26 -.35 15 .20 .10 55 The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal places, e.g., 32.16.) The standard deviation on Stock I's return is deviation on Stock Il's return is percent, and the Stock II beta is stock's systematic risk/beta, Stock riskier percent, and the Stock I beta is The standard Therefore, based on the
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