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Evaluating risk and retum begin{tabular}{|c|c|} hline Expected return of Stock X & 10,00% hline Bota coefficient of Stock X & 0.90 hline Standard

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Evaluating risk and retum \begin{tabular}{|c|c|} \hline Expected return of Stock X & 10,00% \\ \hline Bota coefficient of Stock X & 0.90 \\ \hline Standard deviation of Stock X returns & 30.00% \\ \hline & 9 \\ \hline Expected return of Stock Y & 1250% \\ \hline Beta coefficient of Stock Y & 1.20 \\ \hline Standard deviation of Slock Y returns & 25.00% \\ \hline Risk-free rate (for) & 6.00% \\ \hline Market risk premium ( RPM) & 5.00% \\ \hline Dollars of Stock X in portfolio & $9,500.00 \\ \hline Doliars of Stock Y in portfolio & $7,000.00 \\ \hline \end{tabular} Coefficient of Variation for Stock X Coefficient of Variation for Stock Y Riskier stock to a diviersified investor Required return for Stock X Required return for Stock Y Stock more altractive to a divers fied invostor Required retum of portlolio containing Stocks X and Y in amounts above. ENormulas Now market risk premium 6.00% 30 Wth now market risk premium, stock with larger increase in required return \#N/A 31 32 Check 33 New required retum, Stock X Standard deviation of Stock Y teturns \begin{tabular}{ll} Risk-free rate ( fww) & 6.00% \\ Markot risk premium (RP) & 5.00% \end{tabular} \begin{tabular}{lr} Dollars of Stock X in porttolio & $9,500.00 \\ Dollars of Stock Y in porttolio & $7,000.00 \end{tabular} Coefficient of Variation for Stock X Coefficient of Variation for Stock Y Riskier stock to a diversified investor Required retum for Stock X Required retum for Stock Y Stock more attractive to a dversfifed imvestor Required retum of portsolio containing Stocks X and Y in amounts above New market risk premum Whe new market risk premum, stock wath larger increase in required roturn 10 11 12 13 14 15 16 17 18 19 20 21 27 23 24 25 26 27 28 29 30 increase in required return Check: New required retum, Stock X Change in required return, Stock X New required retum, Stock Y Change in required retum, Stock Y Stock with greater change in required return 31 32 33 34 35 36 37 38 39 40 at

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