There are few, if any, real companies with negative betas. But suppose you found one with = 0.18. a-1. How would you expect this stock's rate of return to change if the overall market rose by an extra 6%? (A negative answer should be indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.)

Change in stock's rate of return

%

a-2. How would the stock's rate of return change if the overall market fell by an extra 6%? (A negative answer should be indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.)

Change in stock's rate of return

%

b. You have $1.2 million invested in a well-diversified portfolio of stocks. Now you receive an additional $27,000 bequest. Which of the following actions will yield the safest overall portfolio return?

1) Invest $27000 in Treasury bills, = 0.

2) Invest $27000 in stocks with = 1

3) Invest $27000 in the stock with = -0.18.