Determine the coefficient of variation for each stock

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Question - 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%.

-Determine the coefficient of variation for each stock.

-Explain which action is riskier for diversified investors.

-Calculate the expected rate of return for both stocks.

-Explain which of the stocks might be more attractive to investors.

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

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

Reference no: EM132995341

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