Consider the following information on Stocks I and II: State...
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Finance
Consider the following information on Stocks I and II:
State of
Probability of
Rate of Return if State Occurs
Economy
State of Economy
Stock I
Stock II
Recession
.20
.010
.30
Normal
.55
.320
.22
Irrational exuberance
.25
.180
.40
The market risk premium is 11 percent, and the risk-free rate is 4 percent. Calculate the beta and standard deviation of Stock I. (Do not round intermediate calculations. Enter the standard deviation as a percent and round both answers to 2 decimal places, e.g., 32.16.)
Stock I
Beta
Standard deviation
%
Calculate the beta and standard deviation of Stock II. (Do not round intermediate calculations. Enter the standard deviation as a percent and round both answers to 2 decimal places, e.g., 32.16.)
Stock II
Beta
Standard deviation
%
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