Question: Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two scenarios: Scenario Probability 0.5 0.5

Consider the following table, which gives a security analyst's expected return

Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two scenarios: Scenario Probability 0.5 0.5 Market Return 7% 20 Aggressive Stock 3.7% 30 Defensive Stock 5.5% 14 2 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 % c. If the T-bill rate is 8%, what are the alphas of the two stocks? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Alpha A Alpha D % %

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