Consider the two $($excess return$)$ index$-$model regression results for stocks A and B$.$ The risk$-$free rate over the period was $6\%,$ and the market$$s average return was $14\%.$ Performance is measured using an index model regression on excess returns.

Stock A Stock B

Index model regression estimates $1\%+1\mathrm{.}2($rM $$ rf$)2\%+0\mathrm{.}8($rM $$ rf$)$

R$-$square $0\mathrm{.}5760\mathrm{.}436$

Residual standard deviation, $\backslash$sigma $($e$)10\mathrm{.}3\%19\mathrm{.}1\%$

Standard deviation of excess returns $21\mathrm{.}6\%24\mathrm{.}9\%$

Required:

Calculate the following statistics for each stock:

Which stock is the best choice under the following circumstances?