Question: Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: Market Return Aggressive Stock Defensive Stock


Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: Market Return Aggressive Stock Defensive Stock 8% 3.5% 5.3% 26 10 20 a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) 1.88 Beta A Beta D 0.39 b. What is the expected rate of return on each stock if the market return is equally likely to be 8% or 20%? (Round your answers to 2 decimal places.) Rate of return on A Rate of return on D 14.75% 7.65% b. What is the expected rate of return on each stock if the market return is equally likely to be 8% or 20%? (Round your answers to 2 decimal places.) Rate of return on A Rate of return on D 14.75% 7.65% c. If the T-bill rate is 8%, and the market return is equally likely to be 8% or 20%, 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 % % x This is a numeric cell, so please enter numbers only
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