1). Assume that Maybank stock has a 5 percent expected return, a beta coefficient of 0.9, and a 35 percent standard deviation of expected returns. CIMB stock has a 6 percent expected return, a beta coefficient of 1.2, and a 25 percent standard deviation. FBM Kuala Lumpur Composite Index (KLCI) generated a return of 8% of the previous year, and the current interest rate of the Malaysian Treasury Bills is 4%

i. Calculate each stock's required rate of return.

ii. Which stock is riskier for a diversified investor? Explain.

iii. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a investor? Why?

iv. Stand-alone risk is consists of market risk and diversifiable risk. Explain the meaning of market risk and diversifiable risk. State two examples for each risk.