Stock X has a 9 0 expected return, a beta coefficient of 0 7, and a 40 standard deviation of expected returns Stock Y has a 13 0 expected return, a beta coefficient of 1 3, 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 CV x CV y Which stock is riskier for a diversified investor 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 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 Calculate each stock's required rate of return Round your answers to one decimal place r x r y On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor Stock X or Stock Y Calculate the required return of a portfolio that has $7,500 invested in Stock X and $2,500 invested in Stock Y Do not round intermediate calculations Round your answer to two decimal places r p If the market risk premium increased to 6 , which of the two stocks would have the larger increase in its required return Stock X or Stock Y

Question

Stock X has a 9 0  expected return, a beta coefficient of 0 7, and a 40  standard deviation of expected returns  Stock Y has a 13 0  expected return, a beta coefficient of 1 3, 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  CV x   CV y   Which stock is riskier for a diversified investor  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  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  Calculate each stock's required rate of return  Round your answers to one decimal place  r x     r y     On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor  Stock X or Stock Y  Calculate the required return of a portfolio that has $7,500 invested in Stock X and $2,500 invested in Stock Y  Do not round intermediate calculations  Round your answer to two decimal places  r p     If the market risk premium increased to 6 , which of the two stocks would have the larger increase in its required return  Stock X or Stock Y

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Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 40% standard deviation of expected returns. Stock Y has a 13.0%

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