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Consider the following information on Stocks I and II: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock I Stock II Recession .21 .050 −.26 Normal .66 .350 .18 Irrational exuberance .13 .210 .46 The market risk premium is 11.6 percent, and the risk-free rate is 4.6 percent.
Requirement 1: (a) Calculate the beta and standard deviation of Stock I. (Do not round intermediate calculations. Enter the standard deviation as a percentage. Round your answers to 2 decimal places (e.g., 32.16).) Stock I Beta Standard deviation % (b) Calculate the beta and standard deviation of Stock II. (Do not round intermediate calculations. Enter the standard deviation as a percentage. Round your answers to 2 decimal places (e.g., 32.16).) Stock II Beta Standard deviation %
Requirement 2: (a) Which stock has the most systematic risk? (b) Which one has the most unsystematic risk? (c) Which stock is “riskier”?
The difference between the weighted-average cost of capital (WACC) and the pre-tax (unlevered) WACC is
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your team has been hired as the accountants for the village of aiu. your team is being asked to do the following please
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