Consider the following information on Stocks I and II: State of Probability of Rate of Return if State...

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Finance

Consider the following information on Stocks I and II:
State of Probability of Rate of Return if State Occurs
Economy State of Economy Stock I Stock II
Recession .22 .045 ? .37
Normal .62 .355 .29
Irrational exuberance .16 .215 .47
The market risk premium is 11.7 percent, and the risk-free rateis 4.7 percent.

Calculate the beta and standard deviation of Stock I. (Donot round intermediate calculations. Enter the standard deviationas a percent and round both answers to 2 decimal places, e.g.,32.16.)
Stock I
Beta
Standard deviation %
Calculate the beta and standard deviation of Stock II.(Do not round intermediate calculations. Enter the standarddeviation as a percent and round both answers to 2 decimal places,e.g., 32.16.)
Stock II
Beta
Standard deviation %
Which stock has the most systematic risk?
Stock I
Stock II

Which one has the most unsystematic risk?
Stock I
Stock II

Which stock is “riskier”?

Stock I
Stock II

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Consider the following information on Stocks I and II:State ofProbability ofRate of Return if State OccursEconomyState of EconomyStock IStock IIRecession.22.045?.37Normal.62.355.29Irrational exuberance.16.215.47The market risk premium is 11.7 percent, and the risk-free rateis 4.7 percent.Calculate the beta and standard deviation of Stock I. (Donot round intermediate calculations. Enter the standard deviationas a percent and round both answers to 2 decimal places, e.g.,32.16.)Stock IBetaStandard deviation%Calculate the beta and standard deviation of Stock II.(Do not round intermediate calculations. Enter the standarddeviation as a percent and round both answers to 2 decimal places,e.g., 32.16.)Stock IIBetaStandard deviation%Which stock has the most systematic risk?Stock IStock II Which one has the most unsystematic risk?Stock IStock IIWhich stock is “riskier”? Stock IStock II

State of	Probability of		Rate of Return if State Occurs
Economy	State of Economy		Stock I		Stock II
Recession		.22		.045	?	.37
Normal		.62		.355		.29
Irrational exuberance		.16		.215		.47