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Consider the following information about Stocks I and II: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock I
| Consider the following information about Stocks I and II: |
| State of Economy | Probability of State of Economy | Rate of Return If State Occurs | |
|---|---|---|---|
| Stock I | Stock II | ||
| Recession | .15 | .05 | .21 |
| Normal | .70 | .18 | .10 |
| Irrational exuberance | .15 | .07 | .39 |
| The market risk premium is 7 percent, and the risk-free rate is 3.5 percent. (Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal places, e.g., 32.16.) |
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77861671, 978-0077861674
