Question
Consider the following table, which gives a security analysts expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return
Consider the following table, which gives a security analysts expected return on two stocks and the market index in two scenarios:
| Scenario | Probability | Market Return | Aggressive Stock | Defensive Stock |
|---|---|---|---|---|
| 1 | 0.5 | 7% | 3.7% | 5.5% |
| 2 | 0.5 | 20 | 30 | 14 |
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? (Round your answers to 2 decimal places.)
| Rate of Return on A | % |
| Rate of Return on D | % |
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International Financial Reporting Standards An Introduction
Authors: Belverd E. Needles, Marian Powers
3rd Edition
1133187943, 978-1133187943
