Question 1-1

Security A has an expected return of 7%, a standard deviation of returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -1.5. Security B has an expected return of 12%, a standard deviation of returns of 10%, a correlation with the market of 0.7, and a beta coefficient of 1.0. Which security is riskier? Why?

Problem 1-2

Assume the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7?

Problem 1-3

Suppose r_RF = 5% r_M = 10%, and r_A = 12%

Calculate stock As beta.

If stock As beta were 2.0, then what would be As new required rate of return?

Please forgive me, I posted the first part of this question (the main body) but forgot to post the rest of the question. So here is the full question. Thank you.