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33. Systematic versus Unsystematic Risk Consider the following information about Stocks I and II: Probability of State of Economy Rate of Return it State Occurs

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33. Systematic versus Unsystematic Risk Consider the following information about Stocks I and II: Probability of State of Economy Rate of Return it State Occurs Stock Stockan 19 States Economy Recession Normal Irrational exuberance .15 55 30 18 .08 -.25 .11 31 The market risk premium is 7.5 percent, and the risk-free rate is 4 percent. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"? Explain

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