Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two

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Consider The Following Table Which Gives A Security Analyst S Expected Return On Two Stocks And The Market Index In Two 1 (56.64 KiB) Viewed 32 times

Consider the following table, which gives a security analyst's expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return 0.5 0.5 20 Aggressive Stock 3.9% 30 Defensive Stock 5.7% 14 2 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) 2.18 Beta A Beta D 0.69 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 16.95% 9.85% c. If the T-bill rate is 8%, 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 %