Question: Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two scenarios: Defensive Stock 4.1% 14

Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two scenarios: Defensive Stock 4.1% 14 Scenario Probability Market Return 1 0.5 0.5 2 Beta A Beta D 6% 16 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) Answer is complete and correct. 2.27 0.99 Answer is complete and correct. Rate of return on A Rate of return on D b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) 13.65 9.05 Aggressive Stock 2.3% 25 % %

on two stocks and the market index in two scenarios: Defensive Stock

Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two 5cenarios: Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) Answer is complete and correct. c. If the T-bill rote 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.) Answer is complete but not entirely correct

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