Q6

Stock X has a 10.0% expected return, a beta ocent of 0.9, and a 35% standard deviation of expected retums. Stock Ya 12.5% expected return, a beta cocent of 1.2, and a 25% standard deviation. The nike free rate a. Calculate each stock's coefficient of variation. Do not found intermediate calculations. Round your answers to two decimal places is 6%, and the market risk premium is 5% CV CV- b. Which stock is risker for a diversified investor? 1. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower betais riskier Stock X has the lower beta sorker than stock Y. 11. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns in riskler Stock Y has the lower standard ddtion so it is iskier than Stock II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky Stock Y has the higher beta so it is less risky than Stock X. IV. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher betais risket Stock y has the higher beta so it is riskier than Stock X. . For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is Stock X has the higher standard deviation so it is ster than stock . Calculate each ock's required rate of return. Round your answers to one decimal place - d. On the base of the two stock expected and required returns, which stock would be more active to a diversified investor . Calculate the required return of a portfolio that has $3,000 sted in stock and $1,000 wested in to Y. Do not round intermediate actions. Round your answer to two decimal places the market is premium creased to, which of the two stocks would have the larger increase is required retur