a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. 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 higher standard deviation of expected returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y. II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y. III. 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 more risky. Stock Y has the lower standard deviation so it is more risky than Stock X. IV. 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. V. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is more risky. Stock Y has the higher beta so it is more risky than Stock X. c. Calculate each stock's required rate of return. Round your answers to two decimal places. rx=ry=%% d. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? e. Calculate the required return of a portfolio that has $4,000 invested in Stock X and $5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp=% f. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return? \begin{tabular}{|c|l|r|} \hline & \multicolumn{1}{|c|}{ A } & \multicolumn{1}{|c|}{ C } \\ \cline { 3 - 3 } 1 & Evaluating risk and return & \\ \hline 2 & & \\ \hline 3 & Expected return of Stock X & 10.00% \\ \hline 4 & Beta coefficient of Stock X & 0.90 \\ \hline 5 & Standard deviation of Stock X returns & 40.00% \\ \hline 6 & & \\ \hline 7 & Expected return of Stock Y & 12.50% \\ \hline 8 & Beta coefficient of Stock Y & 1.20 \\ \hline 9 & Standard deviation of Stock Y returns & 20.00% \\ \hline 10 & & \\ \hline 11 & Risk-free rate ( rRF) & 6.00% \\ \hline 12 & Market risk premium (RP & 5.00% \\ \hline 13 & & \\ \hline 14 & Dollars of Stock X in portfolio & $4,000.00 \\ \hline 15 & Dollars of Stock Y in portfolio & $5,000.00 \\ \hline 16 & & \\ \hline \end{tabular} Stock X has a 10.0% expected return, a beta coefficient of 0.9 , and a 40% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. \begin{tabular}{|c|c|c|c|} \hline 16 & & & Formulas \\ \hline 17 & Coefficient of Variation for Stock X & & #N/A \\ \hline 18 & Coefficient of Variation for Stock Y & & #N/A \\ \hline 19 & & & \\ \hline 20 & Riskier stock to a diviersified investor & & #N/A \\ \hline 21 & & & \\ \hline 22 & Required return for Stock X & & #N/A \\ \hline 23 & Required return for Stock Y & & #N/A \\ \hline 24 & & & \\ \hline 25 & Stock more attractive to a diversified investor & & #N/A \\ \hline 26 & & & \\ \hline 27 & \begin{tabular}{l} Required return of portfolio containing \\ Stocks X and Y in amounts above \end{tabular} & & #N/A \\ \hline 28 & & & \\ \hline 29 & New market risk premium & 6.00% & \\ \hline 30 & \begin{tabular}{l} With new market risk premium, stock with larger \\ increase in required return \end{tabular} & & #N/A \\ \hline 31 & & & \\ \hline 32 & Check: & & \\ \hline 33 & New required return, Stock X & & #N/A \\ \hline 34 & Change in required return, Stock X & & #N/A \\ \hline 35 & & & \\ \hline 36 & New required return, Stock Y & & #N/A \\ \hline 37 & Change in required return, Stock Y & & #N/A \\ \hline 38 & & & \\ \hline 39 & Stock with greater change in required return & & #N/A \\ \hline \end{tabular}