Stock X has a $9\mathrm{.}0\%$ expected return, a beta coefficient of $0\mathrm{.}7,$ and a $30\%$ standard deviation of expected returns. Stock Y has a $12\mathrm{.}0\%$ expected return, a beta coefficient of $1\mathrm{.}1,$ and a $20\%$ standard deviation. The risk$-$free rate is $6\%,$ and the market risk premium is $5\%.$

Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places.

CVx $=$

CVy $=$

Which stock is riskier for a diversified investor?

For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskier. 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 riskier. Stock X has the higher standard deviation so it is riskier than Stock Y$.$

For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is riskier. Stock X has the lower beta so it is riskier than Stock Y$.$

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 riskier. Stock Y has the lower standard deviation so it is riskier than Stock X$.$

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$.$

$-$Select$-$

Calculate each stock's required rate of return. Round your answers to one decimal place.

rx $=$

$\%$

ry $=$

$\%$

On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?

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Calculate the required return of a portfolio that has $$9,000$ invested in Stock X and $$3,000$ invested in Stock Y$.$ Do not round intermediate calculations. Round your answer to two decimal places.

rp $=$

$\%$

If the market risk premium increased to $6\%,$ which of the two stocks would have the larger increase in its required return?

$-$Select$-$