Determine the coefficient of variation for each stock

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Silver Industries Company "Y" shares have an expected return of 15%, a beta coefficient of 0.8, and a standard deviation of expected returns of 31%. The company's Z shares have an expected return of 11.3%, a beta coefficient of 1.5, and a standard deviation of 25%. The risk-free rate is 5% and the market risk premium is 4%.

Problem 1: Determine the coefficient of variation for each stock.

Problem 2: Explain which action is riskier for diversified investors.

Problem 3: Calculate the expected rate of return for both stocks.

Problem 4: Explain which of the stocks might be more attractive to investors.

Problem 5: Calculate the return on a portfolio that has $ 9,200 invested in Stock "Y" and $ 3,500 invested in Stock "Z".

Problem 6: Suppose the market risk premium increases to 7%, which of the stocks would have a higher return?

Reference no: EM132917712

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