BUSN 379 Question 6 & 7
This is problem 30 in the text (information from this problem is needed to answer the questions I need to answer)
(only answer what is in red)
The market risk premium is 11 percent, an the risk-free rate is 4 percent. Which stock has the most systematic risk?
Which one has the most unsystematic risk? Which stock is “riskier”? Explain.
Assume that the probability of the state of the economy has changed as follows:
The probability of the recession has increased to 30% and the probability for an normal state of economy is now 40%.
The market risk premium has increased by 1% as well. What is the standard deviation of the stock 1 and 2 respectively?
The probability of a recession has increased to 30% and the probability for normal state of economy is now 40%.
The market risk premium has increased by 1% as well. Which state is true? Select all that apply:
