Consider the following information on Stocks I and II:

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock I	Stock II
Recession	0.30	0.05	0.18
Normal	0.40	0.19	0.14
Irrational exuberance	0.30	0.13	0.29

The market risk premium is 8 percent and the risk-free rate is 5 percent.

a-1. What is the beta of each stock?

Note: not round intermediate calculations. Round your answers to 2 decimal places.

a-2. Which stock has the most systematic risk?

multiple choice 1

Stock I

Stock II

b-1. What is the standard deviation of each stock?

Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.

b-2. Which one has the most unsystematic risk?

multiple choice 2

Stock I

Stock II

c. Which stock is riskier?

multiple choice 3

Stock I

Stock II