P10-27 (similar to) 5 Question Help Suppose the nisk-free interest rate is 3%, and the stock market will return either +40% or -12% each year, with each outcome equally likely Compare the following two investment strategies (1) invest for one year in the risk-free investment, and one year in the market. or (2) invest for both years in the market. a. Which strategy has the highest expected final payoff? b. Which strategy has the highest standard deviation for the final payoff? c. Does holding stocks for a longer period decrease your risk? a. Which strategy has the highest expected final payoff? The two possible outcomes for investment (1) are % % (Enter the outcomes from largest to smatlost and round to one decimal place) P10-33 (similar to) Suppose the market portfolio is equally likely to increase by 33% or decrease by 13%. a. Calculate the beta of a firm that goes up on average by 31% when the market goes up and goes down by 30% when the market goes down. b. Calculate the beta of a firm that goes up on average by 21% when the market goes down and goes down by 6% when the market goes up. C. Calculate the beta of a firm that is expected to go up 4% independently of the market. a. Calculate the beta of a firm that goes up on average by 31% when the market goes up and goes down by 30% when the market goes down. The beta is (Round to two decimal places.)