Rate of return if state occurs state of probability of


Consider the following information about Stocks A and B: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Recession 0.25 0.06 − 0.30 Normal 0.45 0.18 0.06 Irrational exuberance 0.30 0.12 0.45 The market risk premium is 8 percent, and the risk-free rate is 6 percent. (Round your answers to 2 decimal places. (e.g., 32.16)) The standard deviation on Stock A's return is percent, and the Stock A beta is . The standard deviation on Stock B's return is percent, and the Stock B beta is . Therefore, based on the stock's systematic risk/beta, Stock A or B is "riskier".

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Rate of return if state occurs state of probability of
Reference No:- TGS02724082

Expected delivery within 24 Hours