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Figure 1 2 . 1 1 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard

Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each stock is given beside its plot.
a. Which stock is safest for a diversified investor?
multiple choice 1
Ford
Pfizer
Walmart
b. Which stock is safest for an undiversified investor who puts all her funds in one of these stocks?
multiple choice 2
Ford
Pfizer
Walmart
c. Consider a portfolio with equal investments in each stock. What would this portfolios beta have been? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
d. Consider a well-diversified portfolio made up of stocks with the same beta as Ford. What are the beta and standard deviation of this portfolios return? The standard deviation of the market portfolios return is 20%.(Do not round intermediate calculations. Round your beta answer to 2 decimal places. Enter your standard deviation answer as a percent rounded to 1 decimal place.)
e. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk-free rate of interest is 4%.(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
*Please make sure to get this all right. I can't afford to have it wrong.
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