Due to the pandemic, many travel stocks crashed. The drop was more severe than the overall stock market. Suppose that you hold a cruise stock and experienced -[5.28 10] (note the minus sign) in 2020. If [5.28] is 1.23%, -[5.28 10] = -12.3%. There was no dividends. You held the stock for another year to 2021.

(1) At what percentage return in the second year will you have zero average return for this 2- year holding period? Compute and provide the numerical value with the appropriate average return concept. [Appropriate return concept], [computed value]

(2) Do you think the beta the cruise line stock is bigger or smaller than 1? Explain briefly. [Bigger/Smaller] Why?