Stock U has a 13% expected return, a beta coefficient of 0.9, and a 38% standard deviation of expected returns. Stock V has a 16.5% expected return, a beta coefficient of 1.4, and a 29% standard deviation. The risk-free rate is 4%, and the market risk premium is 6%.

a)Calculate each stock's coefficient of variation.

b)Which stock is riskier for a diversified investor?

c)Calculate each stock's required rate of return.

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

e)Calculate the required return of a portfolio that has PKR10,000 invested in Stock U and PKR4,000 invested in Stock V.

f)If the market risk premium increased to 7%, which of the two stocks would have the larger increase in its required return?