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6. The earnings per share (EPS) for firm C are given below for various scenarios: Probability EPSc 0.3 0.4 0.3 Data for Firms A and
6. The earnings per share (EPS) for firm C are given below for various scenarios: Probability EPSc 0.3 0.4 0.3 Data for Firms A and B are as follows: E(EPS.) $5.8 and A-$3.72. E(EPSJ-34.5 and Og-$3.52. 3.5 4.2 8.2 a. What is the expected value of firm C's EPS? b. What is the coefficient of variation for firm A1? c. What is the coefficient of variation for firm B? d. Assume that c-4621. What is the coefficient of variation for firm C? e. Which stock is most risky based on the coefficient of variation? O Firm A O Firm B O Firm C 7. Below are the expected returns for different asset classes for next year: Asset class T-bills Corporate bonds Exp. returrn 2% 5% Risk and rates of return Asset class Small company stocks Large company stocks a. What is the risk premium for corporate bonds? Exp. return 17.9% 13.8% b. What is the risk premium for small company stocks? c. What is the risk premium for large company stocks
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