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 .035 - .35 Normal .60 .345 .27...

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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
.035
-
.35
Normal.60.345.27
Irrational exuberance.20.205.45

The market risk premium is 11.5 percent, and the risk-free rate is 4.5 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

a)
Beta

b)
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

c)
Beta

d)
Standard deviation		%

Answered 57 days AfterNov 11, 2021

Answer To: Consider the following information on Stocks I and II: State of Probability of Rate of Return if...

Akshay Kumar answered on Jan 07 2022
109 Votes
Sheet1
    Answer
    Particular    Stock 1    Stock 2
    Beta    1.83    2.41
    Stand Dev.    12.26%    9.77%
    Workings: Stock 1
    State    Prob.    Stock 1    Expected Return    Expected Return - Stock 1    (Expected Return - Stock 1)^2    Prob. (Expected Return - Stock...
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