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Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 40% standard deviation of expected returns, Stock Y has a 12.0%

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Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 40% standard deviation of expected returns, Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below X HIHI Open spreadsheet a. Calcutate each stock's coefficient of variation Round your answers to two decimal places. Do not round intermediate calculations. CV, CV Click to see more information b. Which stock is risker for a diversified investor? 1. 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 more risky Stock X has the higher standard deviation so it is more risky than Stock IL Tor diversified investors the relevant risk is measured by bete. Therefore, the stock with the lower beta is more ritky. Stock X has the lower beta so it is more risky than Stock Il 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 is more risky, Stock y has the lower standard deviation so it is more risky than Stock X IV. For diversified investors the relevant risk is measured by bets. Therefore, the stock with the higher boto is less risky Stock Y has the higher beta sotis lessnsky than Stock X V. For diversified wivestors the relevant risk i mesured by beta. Therefore, the stock with the higher beta is morensky, Stock V hins the higher bota sotis more risky than Stock X c. Calculate each stock's required rate of return. Round your answers to two decimal places % % fy d. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? Click to see more information e. Calculate the required return of a portfolio that has $10,000 invested in Stock X and $4,000 invested in Stock Y. Do not round intermediate calculations, Round your answer to two decimal places If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return

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