Question: Problem 7-12 Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: Market Return 8% 20

Problem 7-12 Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: Market Return

Problem 7-12 Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: Market Return 8% 20 Aggressive Stock 3.6% 26 Defensive Stock 5.4% 12 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 retum on each stock if the market retum is equally likely to be 8% or 20%? {Round your answers to 2 decimal places.) Rate of retum an A Rate of retum on D c. If the T-bill rate is 7%, and the market retum is equally likely to be 8% or 20%, 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 A Alpha D

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