Test III. Risk and Rate of Return A. B. Portfolio Context. A stock has a beta...
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Test III. Risk and Rate of Return A. B. Portfolio Context. A stock has a beta of 1.2. Assume that the risk-free rate is 4.5%, and the market risk premium is 5%. What is the stock's required rate of return? Stand Alone Expected Returns. Stocks A and B have the following probability distributions of expected future returns: Probability Stock B .1 -10% Stock A -35% .2 4 2% 0 12 % 20% .2 1 20% 38% 25% 45% B.1. Calculate the expected rate of return for Stock A & B. B.2. Calculate the standard deviation of expected returns for Stock A & B. B.3. Calculate the coefficient of variation for Stock A & B. Test III. Risk and Rate of Return A. B. Portfolio Context. A stock has a beta of 1.2. Assume that the risk-free rate is 4.5%, and the market risk premium is 5%. What is the stock's required rate of return? Stand Alone Expected Returns. Stocks A and B have the following probability distributions of expected future returns: Probability Stock B .1 -10% Stock A -35% .2 4 2% 0 12 % 20% .2 1 20% 38% 25% 45% B.1. Calculate the expected rate of return for Stock A & B. B.2. Calculate the standard deviation of expected returns for Stock A & B. B.3. Calculate the coefficient of variation for Stock A & B.
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