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Consider the following information on Stocks I and II: State of Economy Recession Normal Irrational exuberance Probability of State of Economy .45 .25 .30
Consider the following information on Stocks I and II: State of Economy Recession Normal Irrational exuberance Probability of State of Economy .45 .25 .30 Rate of Return if State Occurs Stock I Stock II .03 .35 -.19 .14 .29 .45 The market risk premium is 12 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.) Stock I Stock II Beta a-2. Which stock has the most systematic risk?
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Investments An Introduction
Authors: Herbert B. Mayo
12th edition
1305638417, 978-1337430937, 1337430935, 978-1305638419
