Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 40% standard deviation of expected returnis. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = b. Which stock is riskier for a diversified investor? I. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is riskier. Stock Y has the lower standard deviation so it is riskier than Stock X. II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. Stock Y has the higher beta so it is less risky than Stock X. Tx = III. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskier. Stock Y has the higher beta so it is riskier than Stock X. IV. For diversified Investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is riskier. Stock X has the higher standard deviation so it is riskler than Stock Y. V. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is riskier. Stock X has the lower beta so it is riskier than Stock Y. -Select- c. Calculate each stock's required rate of return. Round your answers to one decimal place. % Ty = % d. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? -Select- e. Calculate the required return of a portfolio that has $3,000 invested in Stock X and $1,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. Tp = % f. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return? -Select-

da a 30% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation, Do net round intermed ate calculations, Round your answers to two decimal piaces. CVi= CVy= b. Which stock is riskier for a diversilied investor? 1. For diversfied investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviabon of expected returns is riskier. Stock Y has the lower standard deviation so it is riskier than Stock X. It. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky, Stock Y has the higher beta so it is iess risky than stock X. 1II. For diversined investors the relevant risk is measured ty beta. Therefore, the stock with the higher beta is riskier. Stock y has the higher beta so it is fiskier than stoek x. IV. For diversfied investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is riskier. Stock X has the higher standard deviation so it is riskler than stock Y. V. For diversifed investors the relevant nisk is measured by beta. Therefore, the stock with the lower beta is riskier. 5 tock X has the lower beta so it is riswer than Stock Y. c. Calculate each stock's required rate of return. Round your answers to one decimal place. d. On the basis of the two stocks' expected and required refums, which stock would be more attractove to a diveruifed investor? E. Calcalate the required retum of a portfolo that has $3,000 invested in stock X and $1,000 invested in stock Y. Do not round intermediate calculations, itound Yaur answer te twa decimal places. re= 1. If the martet risk premum increased to 6%, which of the two stocks would have the lacger increate in iss requred return