Suppose that tin the coming year, you expect the exxon-Mobil stock to have a volatility of 42% and a beta of 0.9, and Merck's stock to have a volatility of 24% and a beta of 1.1. The risk-free interest rate is 4% and the market's expected return is 12%. Which stock has the highest systematic risk?

1) Merck since it has a higher beta

2) Exxon-Mobil since it has a lower beta

3) Exxon-Mobil since it has a higher volatility

4) Merck since it has a lower volatility