You are considering three stocks Solution a) B > A > C ; more is the beta value

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a) B > A > C ; more is the beta value more riskier is the stock b) return for A = .8 * 12 = 9.6 % return for B = 1.4*12 = 16.8 % return for C = .4 *12 = 4.8 % c)return for A = .8* 5 = 4 % return for B = 1.4 *5 = 7% return for C = .4*5 = 2 % d)we should add stock C in that situation because it has lowest beta value thus having the least risk. e) In that case we will choose stock C because it has the highest beta value thus it has the highest return in case of market rally

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