Suppose that tin the coming year, you expect the exxon-Mobil stock to have a volatility of 42%
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Suppose that tin the coming year, you expect the exxon-Mobil stock to have a volatility of 42% and a beta of 0.9, and Merck's stock to have a volatility of 24% and a beta of 1.1. The risk-free interest rate is 4% and the market's expected return is 12%. Which stock has the highest systematic risk?
1) Merck since it has a higher beta
2) Exxon-Mobil since it has a lower beta
3) Exxon-Mobil since it has a higher volatility
4) Merck since it has a lower volatility
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