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State of Economy State of Economy Stock I Stock II Recession .0.06 0.15 .35 Normal 0.69 0.69 .35 Irrational exuberance 0.25 .43 .45 The market

State of Economy State of Economy Stock I Stock II Recession .0.06 0.15 .35 Normal 0.69 0.69 .35 Irrational exuberance 0.25 .43 .45 The market risk premium is 8 percent, and the risk-free rate is 3.6 percent. The beta of stock I is _____ and the beta of stock II is _____.

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