Stock X has a 10.5% expected return, a beta coefficient of 1.0, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculat CVx =
CVy =
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b. Which stock is riskier for a diversified investor? c. Calculate each stock's required rate of return. Round your answers to two decimal places. rx= % ry = %
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 $9,500 invested in Stock X and $8,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp =% f. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?