Check my work 16 Problem 12-19 Systematic versus Unsystematic Risk (LO2, CFA4) Consider the following information on Stocks I and II: points Rate of Return if State Occurs Book Probability of State of Stock State of Economy Economy Stock I II Recession . 4 .05 -. 17 Reference Normal 40 . 22 . 14 Irrational . 20 . 16 . 32 exuberance The market risk premium is 11 percent and the risk-free rate is 5 percent. a-1. What is the beta of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Beta Stock Stock I a-2. Which stock has the most systematic risk? OStock I OStock II b-1. What is the standard deviation of each stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Standard Deviation Stock I 1% Stock II % b-2. Which one has the most unsystematic risk? OStock I Stock II c. Which stock is "riskier"? OStock I Stock II Check my work 17 Problem 12-21 CAPM (LO3, CFA2) Landon Stevens is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and Garten points Testing, Inc. The risk-free rate is 4.0 percent, the expected return on the market is 12.3 percent, and the betas of the two stocks are 1.2 and .9, respectively. Landon's own forecasts of the returns on the two stocks are 14.60 percent for Furhman Labs and 11.30 percent for Garten. eBook a. Calculate the required return for each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Reference Stock Required Return Furhman Labs % Garten Testing 1% b. Is each stock undervalued, fairly valued, or overvalued? Furhman Labs OUndervalued Oovervalued OFair valued Garten Testing OOvervalued OUndervalued OFair valuedCheck my work 18 Problem 12-22 Calculating Beta (LO4, CFA1) You are given the following information concerning a stock and the market: points Returns Year Market Stock 2014 20% 32% eBook 2015 16 16 2016 22 4 2017 -8 -19 35 16 Reference 2019 15 24 a. Calculate the average return and standard deviation for the market and the stock. (Use Excel to complete the problem. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Market Stock Average return % % Standard deviation % 1% b. Calculate the correlation between the stock and the market, as well as the stock's beta. (Use Excel to complete the problem. Do not round intermediate calculations. Round your correlation answer to 2 decimal places and beta answer to 4 decimal places.) Correlation Beta