Monthly rates return for marathon oil = beta 2.35, Std dev = 48.4%

Monthly rates return for intel = beta 0.91, Std dev = 21.9%

Monthly rates return for intel = beta 0.35, Std dev = 17.5%

1. Which stock is safest for a diversified investor?

2. Which stock is safest for an undiversified investor who puts all her funds in one of these stocks?

3. Consider a portfolio with equal investments in each stock. What would this portfolios beta have been? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

4. Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolios return? The standard deviation of the market portfolios return is 20%. Note: 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.

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