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1. Define risk and investment risk. Please describe standard deviation and the coefficient of variation and...

1. Define risk and investment risk. Please describe standard deviation and the coefficient of variation and how they are used to develop a measure of risk for a stock. The average stock in the S&P 500 has a standard deviation in ROR of 22% and a mean ROR of 12%. Another stock, a publicly-traded venture capital stock, VC Inc., has a standard deviation in ROR of 50% and a mean of 50%. Which stock is riskier and explain your response using the statistics above. Assuming a 12% rate of return on the stock market, a 4% risk-free rate of return, obtain the beta for the company that you analyzed in Question set 1 from Yahoo. Please interpret the beta. What would be that company’s cost of common equity based on your calculation?

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