Question
*******PLEASE PROVIDE SOLUTION AND ANSWER (A-E)***** 1. a) Stock A has a beta of 1.2 and a standard deviation of 25% on its returns. Stock
*******PLEASE PROVIDE SOLUTION AND ANSWER (A-E)*****
1. a) Stock A has a beta of 1.2 and a standard deviation of 25% on its returns. Stock B has a beta of 1.5 and a standard deviation of 20% on its returns. Which stock has the higher systematic risk, and which one has the higher unsystematic risk?
a. A; A
b. A; B
c. B; A
d. B; B
e. B; insufficient information for comparison of unsystematic risks
1. b) Calculate the standard deviation of returns of Stock Q, given the following information.
State | Stock return | Probability of state |
Recession | -2% | 35% |
Normal | 8% | 50% |
Boom | 20% | 15% |
Select one:
a. 7.70%
b. 6.30%
c. 5.37%
d. 7.33%
e. 3.66%
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