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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 | .25 | .06 | .30 | ||||||
Normal | .45 | .18 | .06 | ||||||
Irrational exuberance | .30 | .12 | .45 | ||||||
The market risk premium is 8 percent, and the risk-free rate is 6 percent. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16. Enter your return answers as a percent. ) |
The standard deviation on Stock I's return is ___%, and the Stock I beta is ___. The standard deviation on Stock II's return is ___%, and the Stock II beta is ___. |
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