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

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

on two stocks and the market index in two scenarios: Market Aggressive

Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two scenarios: Market Aggressive Defensive Scenario Probability Return Stock Stock 1 0.5 6% 2.0% 5.0% 2 0.5 20 32 15 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) Answer is complete and correct. Beta A 2.14 Beta D 0.71 b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) Answer is complete and correct. Rate of return on A 17.00 % Rate of return on D 10.00 % c. If the T-bill rate is 7%, 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.) X Answer is not complete. Alpha A Alpha D (2.84) X % %

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