Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 8%, and the markets average return was 15%. Performance is measured using an index model regression on excess returns.

	Stock A	Stock B
Index model regression estimates	1% + 1.2(rM rf)	2% + 0.8(rM rf)
R-square	0.671	0.484
Residual standard deviation, (e)	11.9%	20.7%
Standard deviation of excess returns	23.2%	28.1%

a. Calculate the following statistics for each stock (use whole percent values, 1%, not 0.01 for example, for your calculations): (Round your answers to 4 decimal places.)

b. Which stock is the best choice under the following circumstances?