What is the required rate of return for stock

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Stock A has a standard deviation of return of 40%; Stock B 30%. Stock A has a return correlation coefficient with the S&P500 of 0.32; Stock B 0.85. S&P 500 has an expected return of 12.5% and a standard deviation of return of 20%, while T-bill rate is 3.8%. 1. What is the un-diversifiable risk of Stock A? Stock B? Which stock has greater risk? 2. What is the beta of Stock A? Stock B? 3. What is the risk premium for S&P500? Stock A? Stock B? 4. What is the required rate of return for Stock A? Stock B?

Reference no: EM132022032

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