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Consider the following information about two stocks and indicate which stock has the most systematic risk. State Probability Stock A Stock B Recession 0.20 0.11

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Consider the following information about two stocks and indicate which stock has the most systematic risk. State Probability Stock A Stock B Recession 0.20 0.11 (0.25) !Norman 0.60 | 0.18 | 0.11 Boom 020 008 0.31 Market risk premium 6.50% Risk-free rate 5.00% Neither stock has any systematic risk O Both risk are the same Stock A Stock B

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