Consider the following table, which gives a security analyst's expected return on two stocks for two...

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
	6.76	%		3.76	%		2.01	%
	21.26			30.51			13.76

Required:
(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 return on each stock if the market return is equally likely to be 6.76% or 21.26%? (Round your answers to 2 decimal places. Omit the "%" sign in your response.)


Rate of return on A	%
Rate of return on D	%

(c)

What is the expected rate of return for the market, if the T-bill rate is 9.76%, and the market return is equally likely to be 6.76% or 21.26%? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Expected rate of return

%

Expert Solution

jeff jeffy answered 6 months ago

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Consider the following table, which gives a security analyst's expected return on two stocks for two...

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