Consider the following information on Stocks I and II:

State of	Probability of			Rate of Return if State Occurs
Economy	State of Economy			Stock I				Stock II
Recession		.20				.045			.25
Normal		.65				.345			.17
Irrational exuberance		.15				.205			.45

The market risk premium is 11.5 percent, and the risk-free rate is 4.5 percent. Calculate the beta and standard deviation of Stock I.

Beta			?
Standard deviation			?%

Calculate the beta and standard deviation of Stock II. (Do not round intermediate calculations. Enter the standard deviation as a percent and round both answers to 2 decimal places, e.g., 32.16.)

	Stock II
Beta	?
Standard deviation	?		%

Which stock has the most systematic risk?

	Stock I
	Stock II

Which one has the most unsystematic risk?

	Stock I
	Stock II

Which stock is riskier?

	Stock I
	Stock II