Question 40.6 pts Consider the following information about Stocks 1 and 2: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock 1 Stock 2 Recession 0.15 0.11 -0.25 Normal 0.55 0.18 0.11 Irrational exuberance 0.30 0.08 0.31 The market risk premium is 7.5 percent, and the risk-free rate is 4 percent. (1) Which stock has the most systematic risk? (Please enter either 1 or 2) Stock (2) Which one has the most unsystematic risk? (Please enter either 1 or 2) Stock

Consider the following information about Stocks 1 and 2: The market risk premium is 7.5 percent, and the risk-free rate is 4 percent. (1) Which stock has the most systematic risk? (Please enter either 1 or 2) Stock (2) Which one has the most unsystematic risk? (Please enter either 1 or 2) Stock