Question: 33. Systematic versus Unsystematic Risk Consider the following information about Stocks I and II: Probability of State of Economy Rate of Return it State Occurs

33. Systematic versus Unsystematic Risk Consider the following information about Stocks

33. Systematic versus Unsystematic Risk Consider the following information about Stocks I and II: Probability of State of Economy Rate of Return it State Occurs Stock Stockan 19 States Economy Recession Normal Irrational exuberance .15 55 30 18 .08 -.25 .11 31 The market risk premium is 7.5 percent, and the risk-free rate is 4 percent. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"? Explain

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