Question: Consider the following table, which gives a security analysts expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return

Consider the following table, which gives a security analysts expected return on two stocks and the market index in two scenarios:

Scenario	Probability	Market Return	Aggressive Stock	Defensive Stock
1	0.5	8%	3.9%	5.7%
2	0.5	20	30	14

Required:

a. What are the betas of the two stocks? (Round your answers to 2 decimal places.)

Beta of Aggresive Stock______.

Beta of Defensive Stock______.

b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.)

Rate of return of Aggresive Stock______.

Rate of return of Defensive Stock______.

c. If the T-bill rate 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.)

Alpha of Aggresive Stock______.

Alpha of Defensive Stock______.

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