Consider the following information about Stocks I and II: ...
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Finance
Consider the following information about Stocks I and II:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock I
Stock II
Recession
.25
.05
-.36
Normal
.45
.20
.08
Irrational exuberance
.30
.11
.46
The market risk premium is 8 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16. Enter your return answers as a percent. )
The standard deviation on Stock I's return is ________ percent, and the Stock I beta is _________ . The standard deviation on Stock II's return is ________ percent, and the Stock II beta is _________ . Therefore, based on the stock's systematic risk/beta, Stock (l/ll) is "riskier".
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