Stock X has a 9.5% expected return, a beta coetticient ot 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coetticient 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. XE Open spreadsheet a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CV 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 more risky. Stock Y has the lower standard deviation so it is more risky 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 IlI. 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. IV. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation expected returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y V. 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 c. Calculate each stock's required rate of return. Round your answers to two decimal places. d. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? e. Calculate the required return of a portfolio that has $5,000 invested in Stock X and $2,500 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places Гр %3D f. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return? A. В C 1 Evaluating risk and return 2 3 Expected return of Stock X 9.50% 4 Beta coefficient of Stock X 0.80 5 Standard deviation of Stock X retums 35.00% 6 7 Expected return of Stock Y 12.00% Beta coefficient of Stock Y 110 Standard deviation of Stock Y retums 20.00% 10 Risk-free rate (rRE 11 6.00% Market risk premium (RPM 12 5.00% 13 Dollars of Stock X in portfolio Dollars of Stock Y in portfolio 14 $5,000,00 15 $2,500.00 16 Formulas 17 Coefficient of Variation for StockX #N/A 18 Coefficient of Variation for Stock Y #N/A 19 20 Riskier stock to a dviersified investor #N/A 21. 22 Required return for Stock X #N /A 23 Required return for Stock Y #N/A 24 25 Stock more attractive to a diversified investor #N /A 26 Required return of portfolio containing 27 Stocks X and Y in amounts above #N/A 28 29 New market risk premium 6.00% With new market risk premium, stock with larger increase in required return 30 #N/A 31 32 Check 33 New required return, Stock X Change in required retum, Stock X #N/A 34 #N/A 35 36 New required return, Stock Y Change in required retum, Stock Y #N/A 37 #N/A 38 39 Stock with greater change in required return #N/A 40