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Consider the following information about Stocks A and B: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A
Consider the following information about Stocks A and B: |
Rate of Return if State Occurs | |||||||||
State of | Probability of | ||||||||
Economy | State of Economy | Stock A | Stock B | ||||||
Recession | 0.25 | 0.08 | 0.23 | ||||||
Normal | 0.45 | 0.20 | 0.10 | ||||||
Irrational exuberance | 0.30 | 0.09 | 0.43 |
The market risk premium is 8 percent, and the risk-free rate is 6 percent. (Round your answers to 2 decimal places. (e.g., 32.16)) The standard deviation on Stock A's return is? percent, and the Stock A beta is ? The standard deviation on Stock B's return is ? percent, and the Stock B beta is? . Therefore, based on the stock's systematic risk/beta, Stock (Click to select)BA is "riskier".
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