Need Help with D, E & F Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the marketrisk premium is 5%.a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places.CVx =3.00CVy=2.00b. Which stock is riskler for a diversified investor?I. 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.II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskler. Stock Y has the higher beta so it is riskier than Stock X.III. 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 riskler. Stock X has the higher standard deviation so it isriskler than Stock Y.IV. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is riskler. Stock X has the lower beta so it is riskler than Stock Y.V. 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 riskler. Stock Y has the lower standard deviation so it isriskier than Stock X.11c. Calculate each stock's required rate of return. Round your answers to one decimal place.rx=Ty=10.5 %10.5 %d. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?-Select-e. Calculate the required return of a portfolio that has $9,000 invested In Stock X and $3,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.%f. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?-Select-

The market risk premium, often referred to simply as the "risk premium," is a key concept in finance…

efficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. a diversified Investor? 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 t Investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskler. Stock Y has the higher beta so it is riskier than St Investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expecte ock Y. Investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is riskler. Stock X has the lower beta so it is riskier than Sto Investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected ock X. quired rate of return. Round your answers to one decimal place. stocks' expected and required returns, which stock would be more attractive to a diversified investor? turn of a portfolio that has $9,000 invested in Stock X and $3,000 Invested in Stock Y. Do not round intermediate calculations. Round your answer to

efficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. a diversified Investor? 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 t Investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskler. Stock Y has the higher beta so it is riskier than St Investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expecte ock Y. Investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is riskler. Stock X has the lower beta so it is riskier than Sto Investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected ock X. quired rate of return. Round your answers to one decimal place. stocks' expected and required returns, which stock would be more attractive to a diversified investor? turn of a portfolio that has $9,000 invested in Stock X and $3,000 Invested in Stock Y. Do not round intermediate calculations. Round your answer to

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx= CVy= 2
Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx= CVy= b. Which stock is riskler for a diversified investor? I. 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. II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskler. Stock Y has the higher beta so it is riskier than Stock X. III. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of…
Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 40% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 20% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = b. Which stock is riskier for a diversified investor? I. 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. II. 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. III. For diversified investors the relevant risk is measured by beta. Therefore,…
Assume that you run a regression on the raw returns of the stock of Company J against the raw returns of the market and find an intercept of 1.324 percent and a beta of 1.75. If the risk-free rate is 2.64 percent, and using the concept of Jensen's Alpha, then determine by how much this stock beat the market. Answer in decimal format, to 4 decimal places. For example, if you answer is 3.33%, enter "0.0333".
Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 30% 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. CVx = CVy = Which stock is riskier for a diversified investor? 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…
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 12.0% expected return, a beta coefficient of 1.1, 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. Calculate each stock's required rate of return. Round your answers to one decimal place. rx = % ry = % 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. rp = %
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 30% 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. CVx = CVy = Which stock is riskier for a diversified investor? 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…
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's required rate of return. Round your answers to two decimal places. rx = ry = Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy =
Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, B, for Stock B (A = 12.50%.) Do not round intermediate calculations. Round your answer to two decimal places. % b. Calculate the standard deviation of expected returns, GA, for Stock A (σ = 20.90%.) Do not round intermediate calculations. Round your answer to two decimal places. % Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places. Is it possible that most investors might regard Stock B as being less risky than Stock A? I. If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. II. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. III. If Stock B is less highly correlated with…
Assume that you run a regression on the raw returns of the stock of Company J against the raw returns of the market and find an intercept of 1.324 percent and a beta of 2.36. If the risk-free rate is 2.64 percent, and using the concept of Jensen's Alpha, then determine by how much this stock beat the market. Answer in decimal format. For example, if you answer is 3.33%, enter "0.0333"
Given the returns and probabilities for the three possible states listed below, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 8.10 percent and 11.60 percent, respectively. (Round answer to 4 decimal places, e.g. 0.0768.) Good OK Poor Covariance Probability 0.22 0.60 0.18 Return on Stock A 0.30 0.10 -0.25 Return on Stock B 0.50 0.10 -0.30
The risk-free rate is 3% and the market risk premium is 9%. If stock A has a beta of -0.9, what is the stock's required rate of return? answer format: show your answer in percent (without the % sign) and to 1 decimal place. For example, 12.56 should be shown as 12.6

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