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pls help with this finance qn Question 2 You are given the following information about Stock 1 and Stock 2. Rate of Return if State

pls help with this finance qn

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Question 2 You are given the following information about Stock 1 and Stock 2. Rate of Return if State Occurs State of Probability of Economy State of Economy Stock 1 Stock 2 Recession 0.25 0.11 -0.4 Normal 0.5 0.29 0 .1!) Boom 0.25 0.13 D .56 The market risk premium is 8% and the risk-free rate is 4%. (a) Use an appropriate computing tool to help you work out the following. (i) Calculate the expected returns of Stock 1 and Stock 2. (ii) Appraise which stock has the higher systematic risk. (iii) Compute the total risk of each stock. (iv) Appraise which stock is riskier. (30 marks) SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) Page 3 of4 FIN203 Group-based Assignment (b) Discuss whether a risky asset can have a negative beta and what the CAPM predicts about its return. (10 marks)

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