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1. Given the information below, answer the questions that follow : Market return Aggressive stick Defensive stock 6% 2% 8% 20 30 16 a. Calculate

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1. Given the information below, answer the questions that follow : Market return Aggressive stick Defensive stock 6% 2% 8% 20 30 16 a. Calculate the betas of the two stocks.(3) b. Find outthe expected return on each stock if the market return is equally likely to be 6% or 20%? (3) c. If the risk free rate is 7% and the market rate is equally likely to be 6% or 20%, find out the SML. (6) d. Calculate the alphas of the two stocks.(3)

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