Question
In: Finance
Consider the following information about Stocks I and II: Rate of Return If State Occurs State...
| Consider the following information about Stocks I and II: |
| Rate of Return If State Occurs | |||||||||
| State of | Probability of | ||||||||
| Economy | State of Economy | Stock I | Stock II | ||||||
| Recession | .26 | .06 | −.21 | ||||||
| Normal | .51 | .18 | .08 | ||||||
| Irrational exuberance | .23 | .07 | .41 | ||||||
|
The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16. Enter your return answers as a percent. ) |
|
The standard deviation on Stock I's return is percent, and the Stock I beta is . The standard deviation on Stock II's return is percent, and the Stock II beta is . Therefore, based on the stock's systematic risk/beta, Stock (Click to select) II I is "riskier". |
Solutions
jeff jeffy answered 5 months agoRelated Solutions
Consider the following information about Stocks I and II: Rate of Return if State Occurs State...
Consider the following information about Stocks I and II:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock I
Stock II
Recession
.26
.05
−
.31
Normal
.50
.22
.11
Irrational exuberance
.24
.05
.51
The market risk premium is 5 percent, and the risk-free rate is
3 percent.
The standard deviation on Stock I's expected return
is______percent, and the Stock I beta is_____.The standard
deviation on Stock II's expected return is______percent, and the...
Consider the following information about Stocks I and II: Rate of Return If State Occurs State...
Consider the following information about Stocks I and II: Rate
of Return If State Occurs State of Probability of Economy State of
Economy Stock I Stock II Recession .30 .04 ?.19 Normal .50 .16 .06
Irrational exuberance .20 .05 .39 The market risk premium is 8
percent, and the risk-free rate is 5 percent. (Do not round
intermediate calculations. Round your answers to 2 decimal places,
e.g., 32.16. Enter your return answers as a percent. ) The standard
deviation on...
Consider the following information about Stocks I and II: Rate of Return If State Occurs State...
Consider the following information about Stocks I and II: Rate
of Return If State Occurs State of Probability of Economy State of
Economy Stock I Stock II Recession .30 .08 −.27 Normal .45 .19 .14
Irrational exuberance .25 .13 .47 The market risk premium is 8
percent, and the risk-free rate is 6 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...
Consider the following information on Stocks I and II: RATE OF RETURN IF STATE OCCURS...
Consider the following information on Stocks I and II:
RATE OF RETURN IF STATE OCCURS
STATE OF
ECONOMY
PROBABILITY OF
STATE OF ECONOMY
STOCK I
STOCK II
Recession
0.13
0.15
0.05
Normal
0.14
0.25
0.25
Irrational exuberance
0.73
0.29
0.43
The market risk premium is 11 percent, and the risk-free rate
is 6.05 percent.
For standard deviations: (Do not include the
percent signs (%). Round your answers to 2 decimal...
Consider the following information on Stocks I and II: Rate of Return If State Occurs Probability...
Consider the following information on Stocks I and II:
Rate of Return If State Occurs
Probability of
State of Economy
State of Economy
Stock I
Stock II
Recession
.35
.03
-.23
Normal
.30
.39
.14
Irrational exuberance
.35
.33
.49
The market risk premium is 10 percent, and the risk-free rate
is 4.5 percent.
1-a.
What is the beta of each stock? (Do not round
intermediate calculations. Round your answers to 2 decimal
places.)
Beta
Stock I
Stock II...
Consider the following information about three stocks: Rate of Return If State Occurs State of...
Consider the following
information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.20
.38
.50
.50
Normal
.55
.16
.14
.12
Bust
.25
.00
?.30
?.50
a-1
If your portfolio is invested 30 percent each in A and B and 40
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded...
Consider the following information about three stocks: Rate of Return If State Occurs State of...
Consider the following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.26
.32
.44
.56
Normal
.50
.13
.11
.09
Bust
.24
.04
−.25
−.45
a-1
If your portfolio is invested 40 percent each in A and B and 20
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded...
Consider the following information about three stocks: Rate of Return If State Occurs State of...
Consider the following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.20
.28
.40
.56
Normal
.45
.22
.20
.18
Bust
.35
.00
−.20
−.48
a-1.
If your portfolio is invested 30 percent each in A and B and 40
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations and enter your answer as a
percent...
Consider the following information about three stocks: Rate of Return If State Occurs State of...
Consider the following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.20
.26
.38
.50
Normal
.50
.10
.08
.06
Bust
.30
.01
−.20
−.40
a-1
If your portfolio is invested 30 percent each in A and B and 40
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded...
Consider the following information about three stocks: Rate of Return If State Occurs State of...
Consider the following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.20
.28
.40
.56
Normal
.45
.22
.20
.18
Bust
.35
.00
−.20
−.48
a-1
If your portfolio is invested 30 percent each in A and B and 40
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded...
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