Graph the stock mean-return against its beta. Based on the graph:

1. there is no relationship between a stock's beta and its expected return
2. there is perfect linear relationship between a stock's beta and its expected return
3. answer 2 is predicted for portfolios such as portfolio 8
4. answers 2 and 3 are correct
5. Any relationship between beta and expected return in this graph is accidental

\begin{tabular}{|l|r|r|r|r|r|r|} \hline & JNJ & DIS & KO & WMT & AGG & port \\ \hline std & 0.068115 & 0.120175 & 0.067445 & 0.083386 & 0.016643 & 0.08000 \\ \hline corr(stk,port) & 0.84698 & 0.770773 & 0.60212 & 0.682274 & -0.18673 & 1 \\ \hline beta(w.r.t port) & 0.721155 & 1.157841 & 0.507628 & 0.711153 & -0.038847 & 1 \\ \hline mean & 0.028778 & 0.039541 & 0.023643 & 0.02854 & 0.0100363 & 0.03566 \\ \hline \end{tabular}