Question: Stock Xhasa 9.0% expected return, a beta coefficient of 0.7, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected retum,
Stock Xhasa 9.0% expected return, a beta coefficient of 0.7, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected retum, a beta coefficient of 1.2 and a 20% standard deviation. The risk-free note is 6%, and the market risk premium is 5% Calculate coch stock's coelie of variation. Do not round intermediate calculations, Round your answer to two decimal places CVN- CV- b. Which stock is ticker for a diversified investor? 1. Tor diversfund investers the relevant ik es measured by standard deviation of expected returns. Therefore, the stock with the higher under deviation of expected return is tisk Stock X has the higher standard deviation so it is time than Stock 11. For diversified investors the relevant ik n measured by beta, Therefore, the stock with the lower beta is riskiet Stock X has the lower beta so it is tister than stock Y 11. For diversified investors the relevant ek is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is niskie Stock has the lower standard deviation so it is niskier than Stock X IV for diversified investors the relevantnisk is measured by beta. Therefore, the stock with the higher beta wlesssky stock Y has the higher beta so it is less than Stock X For diversified investors the relevant risk is measured by bets. Therefore, the stock with the higher bieta sa rukier, stock has the higher beta to nie prakses the stock x Calculate each's required rate of retur Round your answers to one decimal place T- On the of the two stocks expected and required returns, which stack would be more attractive to a diverted invester? det Cometom of sporthoth 3,000 wested in stock and $1.000 med Stock . Do not round intermediate creations. Wound your swer to two decale the marketink bemum increased to which of the two stocks would have the targeted return? w
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