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
6% 2.3% 4.1%
16 25 14

probability 0.5, 0.5

a.

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

Beta A
Beta D

b.

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

Rate of return on A %
Rate of return on D %

d.

If the T-bill rate is 8%, what are the alphas of the two stocks? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 1 decimal place.)

Alpha A %
Alpha D %

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