ed Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: Rate of Return if State Occurs Probability of State of State of Economy Recession Economy Stock I .26 .05 Stock II -.31 Normal .50 .22 .11 Irrational exuberance .24 .05 .51 The market risk premium is 5 percent, and the risk-free rate is 3 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 return is deviation on Stock II's return is es stock's systematic risk/beta, Stock percent, and the Stock I beta is The standard percent, and the Stock II beta is Therefore, based on the is "riskier".
ed Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: Rate of Return if State Occurs Probability of State of State of Economy Recession Economy Stock I .26 .05 Stock II -.31 Normal .50 .22 .11 Irrational exuberance .24 .05 .51 The market risk premium is 5 percent, and the risk-free rate is 3 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 return is deviation on Stock II's return is es stock's systematic risk/beta, Stock percent, and the Stock I beta is The standard percent, and the Stock II beta is Therefore, based on the is "riskier".
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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Problem 13-26 Systematic versus Unsystematic Risk [LO3]
Consider the following information about Stocks I and II:
Rate of Return if State
Occurs
Probability of State of
State of Economy
Recession
Economy
Stock I
.26
.05
Stock II
-.31
Normal
.50
.22
.11
Irrational exuberance
.24
.05
.51
The market risk premium is 5 percent, and the risk-free rate is 3 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 return is
deviation on Stock II's return is
es
stock's systematic risk/beta, Stock
percent, and the Stock I beta is
The standard
percent, and the Stock II beta is
Therefore, based on the
is "riskier".](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5804cc2a-4847-49bb-95ea-c90262c0ffa1%2F54546db5-4463-4203-8e2e-5d7fa5bf4f68%2Fsxx5zbc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ed
Problem 13-26 Systematic versus Unsystematic Risk [LO3]
Consider the following information about Stocks I and II:
Rate of Return if State
Occurs
Probability of State of
State of Economy
Recession
Economy
Stock I
.26
.05
Stock II
-.31
Normal
.50
.22
.11
Irrational exuberance
.24
.05
.51
The market risk premium is 5 percent, and the risk-free rate is 3 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 return is
deviation on Stock II's return is
es
stock's systematic risk/beta, Stock
percent, and the Stock I beta is
The standard
percent, and the Stock II beta is
Therefore, based on the
is "riskier".
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