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%	3.1%	4.9%
2	0.5	20	30	15

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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