D\% standard deviation. The elsk-free rate is 6%, and the market risk premlum is 5%. a. Calculate each stock's coefficient of variation, Do not round intermediate calculations. Round your answers to two decimal places. CVx= CVy= b. Which stock is ritwer for a diversified investor? 1. For diversifed investors the relevant risk is measured by beta. Therefore, the stock with the fower beta is riskier. Stock X has the fower beta so it is riskier than Stock vi If. For diversifed investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is riakier. 5 fock y has the lower standard deviation so it is risker than Stock x. Hi. For diverafied investors the relevant risk is measured by beta. Therefore, the stock wath the higher beta is less risky. Stock y has the higher beta so it is less tisky than stock X. W. For Givers fed investars the relevant riak is measured by beta. Therefore, the stock with the Nigher beta is risker. Stock y has the higher beta so it is riskier than Stock x. V. For diversified investars the relevant riak is measured by standard deviation of expected returns. Therefore, the stock nath the higher standard deviation of expected returns is risbles. Stock X has the higher standard deviation so it is riskier than Stock Y. c. Calculate each stock's required rate of return. Round your answers to one decimal piace. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Mound your answers to two decimal places: CVs= GVy= b. Which stick is fisbier for a diversified lavestor? 1. For diversified investors the relevant rick is measured by beta. Therefore, the stock with the lower beta is riskier 5 sock X has the lower beta so it is riskser than stock Yi. If. For diversified Investors the relevant risk is measured by standard deviation of expected returns, Therefore, the stock with the lower standard deviation of expected returns is riskier, Stock Y has the lower standard deviation so it is risker than St0ckX. III. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less nisk. 5 ock Y has the higher beta so it is less nisky than stock X. W. For diversfied investors the relevant risk is messured by beta. Therefore, the stock with the higher bets is risker. Stock y has the higher beta so it is ritkier than Stock X. V. For diversified investors the relevant risk is messured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is riskier. Stock X has the higher standard deviation so it is risber than stock y. c. Calculate each stock's reaulred rate of return. Round your answers to one decimal place. d. On the hasis of the two stockv' expected and required returns, which stock would be more attractive to a diversfied investor? 6. Calculote the required retum of a portfolio that has $3,000 invested in 5 tock X and $1,000 invested in 5 tock Y, Do not round intermediate calculationi. Round your answer to two decimal piaces: fp= f. It the market ilsk premium increased to 6%, which of the two stocks nould have the iarger increase in as required retum
