Question
Consider the following information on Stocks I and II: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock I
Consider the following information on Stocks I and II:
| Rate of Return if State Occurs | |||
| State of Economy | Probability of State of Economy | Stock I | Stock II |
| Recession | .30 | .04 | -.15 |
| Normal | .25 | .31 | .14 |
| Irrational exuberance | .45 | .25 | .41 |
The market risk premium is 8 percent and the risk-free rate is 6 percent.
a-1. What is the beta of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b-1. What is the standard deviation of each stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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Surviving In General Management
Authors: Philip Berman, Pauline Fielding
1st Edition
9780333483145
