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Unformatted text preview: that your firm's stock will have a -1% return if the economy is weak, a 11% return if the economy is average, and a 35% return if the economy is strong. On the basis of this estimate, what is the coefficient of variation for your firm's stock? 5) A stock has a required return of 11.00%. The beta of the stock is 1.10 and the risk-free rate is 4.00%. What is the market risk premium? 6) Portfolio P has 40% invested in Stock X and 60% in Stock Y. The risk-free rate of interest is 6% and the market risk premium is 4%. Portfolio P has a required return of 12% and Stock X has a beta of 0.70. What is the beta of Stock Y?...
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This note was uploaded on 06/09/2011 for the course ECONOMICS 101 taught by Professor Kizlik during the Spring '11 term at FAU.
- Spring '11