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

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 4% -2% 4% 26 37 10 a. What are the betas of the two stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Beta Aggressive Stock Defensive Stock b. What is the expected rate of return on each stock if the market return is equally likely to be 4% or 26%? (Do not round intermediate calculations. Round your answers to 1 decimal place. Omit the "%" sign in your response.) Expected Rate of Return Aggressive Stock Defensive Stock 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 market return is equally likely to be 4% or 26%? Also, assume a T-Bill rate of 4%. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Hurdle rate olo

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