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Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: State of Economy Probability of State of Economy Rate
Problem 13-26 Systematic versus Unsystematic Risk [LO3]
| Consider the following information about Stocks I and II: |
| State of Economy | Probability of State of Economy | Rate of Return if State Occurs | |
|---|---|---|---|
| Stock I | Stock II | ||
| Recession | .30 | .05 | .30 |
| Normal | .45 | .22 | .10 |
| Irrational exuberance | .25 | .05 | .50 |
| The market risk premium is 6 percent, and the risk-free rate is 2 percent. (Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal places, e.g., 32.16.) |
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Real Estate Finance
Authors: Walt Huber, Levin P. Messick
5th Edition
0916772438, 9780916772437
