There are two possible states of the economy, good and bad, each with 50% probability. If the economy is good, the market return is 40%, the return on stock A is 52% and the return on stock B is 32%. If the economy is bad, the market return is -10%, the return on stock A is -13% and the return on stock B is -8%.

What is the beta of each stock?

If the risk-free rate = 5%, which stock should you buy?