Question: Consider the following table, which gives a security analysts expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return

Consider the following table, which gives a security analysts expected return on two stocks and the market index in two scenarios:

Scenario Probability Market Return Aggressive Stock Defensive Stock
1 0.5 7% 3.7% 5.5%
2 0.5 20 30 14

Required:

a. What are the betas of the two stocks? (Round your answers to 2 decimal places.)

BETA A
BETA D

b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.)

Rate of Return on A %
Rate of Return on D %

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