Hvide AZ Online Structured Activity: Easting vandretum Stock x 10.01.pected return, but contato., and a devoted to expected return, beta coeficient of 12 and 25.04 ndard deviation. Thered the man The data aceed the contine le below. Open the stand performers Gube ..Cocktached concert ut variation and you to two decimo moment medias CV. c. which is for diversified investor? 1. For det vara med by standard for the Stay UM A-Z b. Which stock is ricket for a diversified Investor? 1. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the Higher standard deviation of expected returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock 11. For diversified investors the relevant risk is measured by heta. Therefore, the stock with the lower beta is more viky. Suc x has the lower beta so it is more risky than Stock Y. II. 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 more risky Stock has the lower standard deviation so it is more tid than Stock IV. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher betale less nok, Stock has the higher beta so it is less risky than Stock X. V. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is more visky, Stock has the higher beta so it is more risky than Stock Calculate each stocks required rate of return. Round your answers to two decimal places T- On the basis of the two stocks expected and required return, which wock wood be more attractive to a diversified investors 1201 PM 22 C.Calculate each stock's required rate of return. Round your answers to two decimal places d. On the basis of the two stocks' expected and required returm, which stock would be more attractive to a diversified investor? e. Calculate the required retum of a portfolio that has 35.900 invested in stock X and $2.500 invested in Stock , Do not round intermediate calculations. Round your answer to two decimal places Ned 1. If the market risk premium increased to , which of the two stocks would have the targer increase in es recured potom? 12:02 PM B/1/21 AF Rain coming 10.00% 0.90 35.00% 12.50% 1.20 25.00% 8 6.00% 5.00% 1 Evaluating risk and return 2 3 Expected return of Stock X 4 Beta coefficient of Stock X 5 Standard deviation of Stock X returns 6 7 Expected return of Stock Y Beta coefficient of Stock Y Standard deviation of Stock y returns 10 11 Risk-free rate (TRF) 12 Market risk premium (RPM) 13 14 Dollars of Stock X in portfolio 15 Dollars of Stock Y in portfolio 16 17 Coefficient of Variation for Stock X 18 Coefficient of Variation for Stock Y 19 20 Riskier stock to a diviersified investor 21 22 Required return for Stock X 23 Required return for Stock Y $5.500.00 $3,500.00 Formulas #N/A #N/A #N/A #N/A #N/A Sheet1 + A B D Coefficient of Variation for Stock Y #N/A Riskier stock to a diviersified investor #N/A - Required return for Stock X Required return for Stock Y #N/A #N/A - Stock more attractive to a diversified investor #N/A Required return of portfolio containing - Stocks X and Y in amounts above #N/A 6.00% New market risk premium With new market risk premium, stock with larger increase in required return #N/A #N/A Check New required return, Stock X Change in required return, Stock X #NIA #N/A #N/A New required return, Stock Y Change in required return, Stock Y Sheet1 +
