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Consider the following information about Stocks I and II: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock I

Consider the following information about Stocks I and II:

Rate of Return If State Occurs
State of Probability of
Economy State of Economy Stock I Stock II
Recession .15 .03 .23
Normal .70 .20 .09
Irrational exuberance .15 .08 .43

The market risk premium is 7 percent, and the risk-free rate is 3.5 percent. (Round your answers to 2 decimal places, e.g., 32.16.)

Consider the following information about Stocks I and II:

Rate of Return If State Occurs
State of Probability of
Economy State of Economy Stock I Stock II
Recession .15 .03 .23
Normal .70 .20 .09
Irrational exuberance .15 .08 .43

The market risk premium is 7 percent, and the risk-free rate is 3.5 percent. (Round your answers to 2 decimal places, e.g., 32.16.)

Consider the following information about Stocks I and II:

Rate of Return If State Occurs
State of Probability of
Economy State of Economy Stock I Stock II
Recession .15 .03 .23
Normal .70 .20 .09
Irrational exuberance .15 .08 .43

The market risk premium is 7 percent, and the risk-free rate is 3.5 percent. (Round your answers to 2 decimal places, e.g., 32.16.)

The standard deviation on Stock I's return is percent, and the Stock I beta is . The standard
deviation on Stock II's return is percent, and the Stock II beta is . Therefore, based on the
stock's systematic risk/beta, Stock I is riskier.

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