Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

** need help only with standard deviation for b. i got 19.94% but that is wrong. Thanks in advance! Rate of Return if State Occurs

image text in transcribed** need help only with standard deviation for b.

i got 19.94% but that is wrong.

Thanks in advance!

Rate of Return if State Occurs Probability of State of Economy .22 State of Economy Recession Normal Irrational exuberance .62 .16 Stock .045 .355 .215 Stock II -.37 .29 .47 The market risk premium is 11.7 percent, and the risk-free rate is 4.7 percent. a. Calculate the beta and standard deviation of Stock I. (Do not round intermediate calculations. Enter the standard deviation as a percent and round both answers to 2 decimal places, e.g., 32.16.) b. Calculate the beta and standard deviation of Stock II. (Do not round intermediate calculations. Enter the standard deviation as a percent and round both answers to 2 decimal places, e.g., 32.16.) c. Which stock has the most systematic risk? d. Which one has the most unsystematic risk? e. Which stock is "riskier"? a. Beta Standard deviation Beta Standard deviation 1.86 12.68% 1.08 17.94%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Python For Finance

Authors: Yves Hilpisch

2nd Edition

1492024333, 978-1492024330

More Books

Students also viewed these Finance questions