### Stock - Risk and Return

A. Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50. Which stock is riskier? Explain. b. Suppose rf is 5% and rM is 10%. According to the SML and t