Excel Online Structured Activity: Evaluating risk and returnStock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% 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%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.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 more risky. Stock Y has the higher beta so it is more risky 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 returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y.For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y.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 more risky. Stock Y has the lower standard deviation so it is more risky 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._________Calculate each stock's required rate of return. Round your answers to two decimal places.rx =_________%ry = _________%On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?_______________Calculate the required return of a portfolio that has $6,000 invested in Stock X and $5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.rp = __________8%If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?____________ Exceltemplate - Saved-OSearch (Alt OFileHomeInsertDrawPage LayoutFormulasFormulasDataReviewViewArialv 10B B av A ..17A1 Evaluating risk and retum3 Expected retum of Stock XBota coefficient of Stock X9 50%0 804.Slandard devation of Stock X retums35.00%6.Expected return of Stock YBeta coethcient of Stock Y12.00%1 109.Standard devViation of Stock Y returns20 00%1011 Risk-tree rate (fey)6 0012 Market rsk premium (RPu)5 00%1314 Dollars of Stock X in portfolioDoilars of Stock Y in portfotio$6,000.00$5,000 001516Formulas17Coeftcent of Variation for Stock XNA18 Coefficient of Variation for Stock Y#N/A1920 Raskier stock to a diviersdfied investorIN/A21IN/A22 Required return for Stock X23 Required return for Stock YIN/A2425 Stock mIore aftractive to a diversfied investorIN/A FileDrawPage LayoutFormulasDataReviewViewHomeInsertV 10田、AvArialfrAB.EN/A5 Stock more attractive to a diversified investorRequired return of portfolio containing7 Stocks X and Y in amounts above#N/A6.00%9New market risk premiumWith new market isk premium, stock with largerO uncrease in required retturnIN/A2 Check3 New required return, Stock X34 Change in required return, Stock XN/A#NASSIN/A36 New required return, Stock Y37 Change in required return, Stock Y3839 Stock with greater change in required return4041424344EN/ANA45AC

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Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% 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%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. 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 more risky. Stock Y has the higher beta so it is more risky 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 returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y. 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 more risky. Stock Y has the lower standard deviation so it is more risky 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. _ Calculate each stock's required rate of return. Round your answers to two decimal places. rx =_% ry = _____%

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Excel Online Structured Activity: Evaluating risk and return

Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% 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%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.

CV_x = ________

CV_y = _________
Which stock is riskier for a diversified investor?
1. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is more risky. Stock Y has the higher beta so it is more risky than Stock X.
2. 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 more risky. Stock X has the higher standard deviation so it is more risky than Stock Y.
3. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y.
4. 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 more risky. Stock Y has the lower standard deviation so it is more risky than Stock X.
5. 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.
_________
Calculate each stock's required rate of return. Round your answers to two decimal places.

r_x =_________%

r_y = _________%
On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?

_______________
Calculate the required return of a portfolio that has $6,000 invested in Stock X and $5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.

r_p = __________8%
If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?

____________

Excel
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Formulas
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Arial
v 10
B B av A ..
17
A
1 Evaluating risk and retum
3 Expected retum of Stock X
Bota coefficient of Stock X
9 50%
0 80
4.
Slandard devation of Stock X retums
35.00%
6.
Expected return of Stock Y
Beta coethcient of Stock Y
12.00%
1 10
9.
Standard devViation of Stock Y returns
20 00%
10
11 Risk-tree rate (fey)
6 00
12 Market rsk premium (RPu)
5 00%
13
14 Dollars of Stock X in portfolio
Doilars of Stock Y in portfotio
$6,000.00
$5,000 00
15
16
Formulas
17
Coeftcent of Variation for Stock X
NA
18 Coefficient of Variation for Stock Y
#N/A
19
20 Raskier stock to a diviersdfied investor
IN/A
21
IN/A
22 Required return for Stock X
23 Required return for Stock Y
IN/A
24
25 Stock mIore aftractive to a diversfied investor
IN/A

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EN/A
5 Stock more attractive to a diversified investor
Required return of portfolio containing
7 Stocks X and Y in amounts above
#N/A
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9New market risk premium
With new market isk premium, stock with larger
O uncrease in required retturn
IN/A
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3 New required return, Stock X
34 Change in required return, Stock X
N/A
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36 New required return, Stock Y
37 Change in required return, Stock Y
38
39 Stock with greater change in required return
40
41
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