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Consider the two (excess return) index-model regression results for stocksAandB. The risk-free rate over the period was 4%, and the market's average return was 13%. Performance is measured using an index model regression on excess returns.

StockAStockBIndex model regression estimates1% + 1.2(r_Mr_f)2% + 0.8(r_Mr_f)R-square0.6950.496Residual standard deviation, (e)12.3%21.1%Standard deviation of excess returns23.6%28.9%

a.Calculate the following statistics for each stock:(Round your answers to 4 decimal places.)

b.Which stock is the best choice under the following circumstances?