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sck X has a 9.5% expected return, a beta coefficient of 0.8 , and a 35% standard deviabion of expected returns. stock Y has a

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sck X has a 9.5% expected return, a beta coefficient of 0.8 , and a 35% standard deviabion of expected returns. stock Y has a 13.0% expected return, a beta coefficient of 1.3 , and 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Round your answers to two dedmbl places. Do not round intermediate caiculations. CVx=CVy= b. Which stock is riskier for a diversified investor? 1. For diversifled investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock x has the lower beta so it is more risky than Stock Y. II. For diversified investors the relevant tisk is measured by standard deviation of expected refums, Therefore, the stock with the lower standard deviation of expected returms is more risky. Stock Y has the lower standard deviation so it is mere risky thaj Stoek X. III. For diversified investors the relevant risk is measured by beta. Therefore, the stock w th the higher beta is less risky, 5 tock Y has the higher beta so it is iess risky than 5tockx. IV. For diversitied imvestors the relevent risk is measured by beta. Therefore, the stock with the higher bets is more rsky. stock y has the higher beta so it is more risky than Stock x : V. For diversified investors the relevant risk is measured by standord deviation of expected returns. Therefore, the stock with the higher itandard deviation of expected returns is more risky. Stock X has the higher standard deviation so it is more risky than 5 tock Y. c. Calculate each stock's required rate of return. Round your answers to two decimal places. d. On the basik of the two stocks' expected and regulred returns, which stock would be mere attractive to a diversined investor? e. Caiculase the required return of a pertfolo that has 57,000 invested in 5 tock X and $5,500 invested in 5 eck Y, Do not round intermediate calculations. Hourd your answer to two dorimal places. f. If the market risk premium increased to 6%, which of the tho stocks would have the larger increase in its required return

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