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Consider the following Information on Stocks I and II: 0 . 4 points table [ [ , Probability of State of , , ]
Consider the following Information on Stocks I and II:
points
tableProbability of State ofState of Econony,Economy,Stock I,RecessionStock IINormalIrrationalexuberance
The market risk premium is percent and the riskfree rate is percent.
a What is the beta of each stock?
Note: Do not round intermedlate calculations. Round your answers to decimal places.
tableBetaStock I,Stock II
a Which stock has the most systematic risk?
Stock I
O Stock II
b What is the standard deviation of each stock?
Note: Do not round intermedlate calculations. Enter your answers as a percent rounded to decimal places.
tableStandard DeviationSlockISlock II
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