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Consider the following information about Stocks I and II: table [ [ State of Economy, table [ [ Probability of State of -
Consider the following information about Stocks I and II:
tableState of Economy,tableProbability of State ofEconomytableRate of Return if StateOccursStock I,Stock IIRecessionIrrational exuberance,
The market risk premium is percent, and the riskfree rate is percent. Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to decimal places, eg Round your beta answers to decimal places, eg
tableThe standard deviation on Stock Is return is percent, and the Stock I beta is The standarddeviation on Stock II's return ispercent, and the Stock II beta isTherefore, based on thestocks systematic riskbeta Stock,,is "niskier",
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