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 7 4 7 21 38 10 a What are the betas of the two stocks (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 7 or 21 ( Round your answers to 2 decimal places Omit the sign in your response ) Expected rate of return Aggressive Stock Defensive Stock c What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firms stock if market return is equally likely to be 7 or 21 Also, assume a T Bill rate of 7 ( Do not round intermediate calculations Round your answer to 2 decimal places Omit the sign in your response ) Hurdle rate

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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
7%	-4%	7%
21	38	10

a.	What are the betas of the two stocks? (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 7% or 21%? (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

	Expected rate of return
Aggressive Stock	%
Defensive Stock	%

What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firms stock if market return is equally likely to be 7% or 21%? Also, assume a T-Bill rate of 7%? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Hurdle rate

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