Question: Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate return on the market:

Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate return on the market: a. What are the betas of the two stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock if the two scenarios for the market return are equally likely to be 7% or 20% ? (Do not round intermediate calculations, Round your answers to 1 decimal place.) e. What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firm's stock if the two scenarios for the market return are equally likely? Also, assume a T-Bill rate of 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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