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S Consider the following information on Stocks I and II: State of Economy Recession Normal Irrational exuberance Stock I Stock II Probability of State of
S Consider the following information on Stocks I and II: State of Economy Recession Normal Irrational exuberance Stock I Stock II Probability of State of Economy Beta OStock I Stock II .45 .30 .25 The market risk premium is 12 percent and the risk-free rate is 4 percent. a-1. What is the beta of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal plac a-2. Which stock has the most systematic risk? Rate of Return if State Occurs Stock I .04 .29 .23 Stock II -.22 .14 .39
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