Question
please do not use excel 14 Points ] Consider the following information on Stocks A and B: State of Economy Probability of Rate of Return
please do not use excel
- 14 Points] Consider the following information on Stocks A and B:
| State of Economy | Probability of | Rate of Return if State Occurs | |
|
| State of Economy | Stock A | Stock B |
| Recession | 0.30 | 2% | -5% |
| Boom | 0.70 | 15% | 12% |
The market expected return is 11%, and the risk-free rate is 4%.
- Which stock has more systematic risk? Use the calculation to support your answer.
- Which stock has more total risk? Use the calculation to support your answer.
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Financial Accounting
Authors: Robert Libby, Patricia Libby, Frank Hodge
9th edition
290-1259222138, 1259222136, 978-1259222139
