Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns. Use this info for the next two questions.

Market Return Aggressive Stock A Defensive Stock D

8% 6% 4%

20% 36% 15%

1) What are the betas of the two stocks? Use BA II plus to find beta

	Beta of stock A = 1.8, Beta of stock B = 0.33
	Beta of stock A = 2.5, Beta of stock B = 0.92
	Beta of stock A = 1.9, Beta of stock B = 0.85
	Beta of stock A = 3.5, Beta of stock B = 0.65

2) If the T-bill rate is 6% and the market return is equally likely to be 8% and 20%, what is the return on Stock A based on CAPM and what is the alpha of stock A?

	26% and alpha is -5%
	26% and alpha is 5%
	20% and alpha is -2%
	18% and alpha is -5%