Answered step by step
Verified Expert Solution
Question
1 Approved Answer
a. Calculate each stock's coeffident of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVz=CVy= b. Which stock is riskier
a. Calculate each stock's coeffident of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVz=CVy= b. Which stock is riskier for a diversified investor? 1. 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 riskier. Stock Y has the lower standard deviation so it is riskler than 5 tock X. 11. Foe divenified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. 5 tock Y has the higher beta so it is less risky than 5tock X. III. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is tisker. Stock Y has the higher beta so it is riskier than Stock X. IV. For diversified investors the relevant risk is measured by standard Eeviation of expected returns. Therefore, the stock with the higher standard deviabion of expected returns is riskler, 5 tock has the higher standard deviation so it is riskier than 5 tock Y. V. For diversified livesfors the relevant risk is measured by beta. Therefore, the stock with the lower beta is riskiet, stock x has the lower beta so it is riskler than stock Y. c. Caiculate each stock's required rate of retum. Round your answers to one dejz mal place. d. On the basis of the two stotks' expected and recuined returns, which stock would be mare sttractive to a diversified invester? e. Calculate the required retum of a portfolio that has 39,000 invested in 5 tock X and 17,000 invested in stock Y. Da not round intermedate calculations. Round your answer to two decimal places. fy=
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started