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Consider the following information about Stocks I and II: Rate of Return if State Occurs State of Economy Stock / Stock 11 Probability of State
Consider the following information about Stocks I and II: Rate of Return if State Occurs State of Economy Stock / Stock 11 Probability of State of Economy .30 .45 .09 .16 .24 .11 Recession Normal Irrational exuberance .25 .10 .44 The market risk premium is 8 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Enter the standard deviations as a percent and round all answers to 2 decimal places, e.g., 32.16.) The standard deviation on Stock I's expected return is percent, and the Stock I beta is The standard deviation on Stock Il's expected return is percent, and the Stock Il beta is 0.59 Therefore, based on the stock's systematic risk/beta, Stock is "riskier
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