Question: a. Which stock has more systematic risk? b. Which stock has more total risk? c. If you formed a portfolio by using 30% of DuBear

a. Which stock has more systematic risk? b. Which stock has

a. Which stock has more systematic risk?

b. Which stock has more total risk?

c. If you formed a portfolio by using 30% of DuBear and 70% of LaFaSai, what is your expected return and what is the beta of your portfolio?

You have the following information on the stock of DuBear and LaFaSai: Rate of return if Sate Occurs State of Econom Recession Normal Boom Probability of State DuBear 2% 10% 30% LaFaSai -15% 10% 20% of Econom 50% 20% 30% The market return is 10 percent, and the risk-free rate is 3 percent. It is assumed that the CAPM holds

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