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10 February, 03:09

Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx

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  1. 10 February, 03:32
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    Coefficient of Variation for X = 3.5

    Coefficient of Variation for Y = 1.54

    Explanation:

    The computation of coefficient of variation is shown below:-

    Coefficient of Variation for X = Standard Deviation : Expected Return

    = 0.35 : 0.10

    = 3.5

    Coefficient of Variation for Y = Standard Deviation : Expected Return

    = 0.20 : 0.13

    = 1.54

    Therefore for computing the coefficient of variation we simply applied the above formula.
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