Consider the following information on Stocks I and II: ...
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Accounting
Consider the following information on Stocks I and II:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock I
Stock II
Recession
.30
.05
.30
Normal
.45
.22
.10
Irrational exuberance
.25
.05
.50
The market risk premium is 6 percent, and the risk-free rate is 2 percent. (Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to 2 decimal places (e.g., 32.16). Round your beta answers to 2 decimal places (e.g., 32.16).)
The standard deviation on Stock I's expected return is percent, and the Stock I beta is . The standard deviation on Stock II's expected return is percent, and the Stock II beta is . Therefore, Stock (Click to select) II I is "riskier".
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