Question: Given the following two stocks A and B (20 marks) a) If the expected market rate of return is 0.09 and the risk-free rate is

Given the following two stocks A and B (20 marks)

a) If the expected market rate of return is 0.09 and the risk-free rate is 0.05, which security would be considered the better buy and why? (5 marks)

b) What is beta value? Using above to data, classified them into cyclical stock or defensive stock. (5 marks)

c) What is alpha value? Explain the use of alpha value in the above analysis (5 marks)

d) From economic cycle point of view, assumed that the economy is classified as recession now, which stock should be chosen based on question a)?

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