Question

Consider the following information about Stocks I and II: State of Economy Probability of State of...

Consider the following information about Stocks I and II:

State of Economy

Probability of State of Economy

Return of Stock I if State Occurs

Return of Stock II if State Occurs

Recession

0.10

-0.02

-0.20

Normal

0.70

0.20

0.15

International exuberance

?

0.16

0.40

The expected market return is 10 percent, and the risk-free rate is 4 percent. Answer questions 16 to 18.

  1. What is the beta for stock I?

8. What is the beta for stock II?

9. Which stock has more systematic risk? Explain.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the following information about Stocks I and II: State of Economy Probability of State of...
Consider the following information about Stocks I and II: State of Economy Probability of State of Economy Return of Stock I if State Occurs Return of Stock II if State Occurs Recession 0.10 -0.02 -0.20 Normal 0.70 0.20 0.15 International exuberance ? 0.16 0.40 The expected market return is 10 percent, and the risk-free rate is 4 percent. Answer questions 16 to 18. 1) What is the beta for stock I? 2) What is the beta for stock II? 3)...
Consider the following information about Stocks I and II: State of Economy Probability of  Economy Rate of...
Consider the following information about Stocks I and II: State of Economy Probability of  Economy Rate of Return if State Occurs Stock I Rate of Return if State Occurs Stock II Recession .26 .06 - .21 Normal .51 .18 .08 Irrational exuberance .23 .07 .41 The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Enter the standard deviations as a percent and round all answers to 2 decimal places, e.g., 32.16.)...
Consider the following information on Stocks I and II: RATE OF RETURN IF STATE OCCURS   STATE...
Consider the following information on Stocks I and II: RATE OF RETURN IF STATE OCCURS   STATE OF   ECONOMY PROBABILITY OF STATE OF ECONOMY STOCK I STOCK II   Recession 0.06                -0.35           -0.25             Normal 0.23                0.29           0.23             Irrational exuberance 0.71                0.39           0.29           The market risk premium is 12 percent, and the risk-free rate is 5.4 percent. For standard deviations: (Do not include the percent signs (%). Round your answers to 2 decimal places....
Consider the following information on Stocks I and II: Rate of Return if State Occurs   State...
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 .09 − .24   Normal .45 .16 .11   Irrational exuberance .25 .10 .44 The market risk premium is 8 percent, and the risk-free rate is 4 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...
Consider the following information on Stocks I and II: Rate of Return if State Occurs State...
Consider the following information on Stocks I and II: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock I Stock II Recession 0.25 0.03 -0.20 Normal 0.25 0.36 0.14 Irrational exuberance 0.50 0.30 0.46 The market risk premium is 13 percent and the risk-free rate is 6 percent. a-1. What is the beta of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock I: Stock II: a-2. Which...
Consider the following information on Stocks I and II: State of Probability of Rate of Return...
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...
Consider the following information on Stocks I and II: Rate of Return If State Occurs Probability...
Consider the following information on Stocks I and II: Rate of Return If State Occurs Probability of   State of Economy State of Economy Stock I Stock II   Recession .40 .04 -.21   Normal .30 .28 .14   Irrational exuberance .30 .22 .38 The market risk premium is 11 percent, and the risk-free rate is 4 percent. 1-a. What is the beta of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Beta   Stock I         Stock II...
Consider the following information on Stocks I and II: Rate of Return If State Occurs Probability...
Consider the following information on Stocks I and II: Rate of Return If State Occurs Probability of   State of Economy State of Economy Stock I Stock II   Recession .35 .04 -.20   Normal .30 .27 .14   Irrational exuberance .35 .21 .37 The market risk premium is 10 percent, and the risk-free rate is 4 percent. 1-a. What is the beta of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Beta   Stock I         Stock II...
Consider the following information on Stocks I and II: Rate of Return if State Occurs   State...
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 .28 .05 − .20   Normal .53 .17 .07   Irrational exuberance .19 .06 .40 The market risk premium is 8 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...
Consider the following information on Stocks I and II: Rate of Return if State Occurs   State...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT