Market Capitalization(in millions) Expected Liquidating Dividend(in millions) Beta

Stock A 917 1,000 0.67 Stock B 974 1,000 1.52 Stock C 964 1,000 1.19 Stock D 976 1,000 1.01

Consider the following stocks,

all of which will pay a liquidating dividend one year from now and nothing in the interim.

a. Calculate the expected return of each stock.

b. What is the correlation between the expected return and market capitalization of the stocks?