Question
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
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 7.0% 2.2% 5.0% 15.0% 25.0% 12.0%
a. What are the betas of the two stocks?
b. What is the expected rate of return on each stock if the market return is equally likely to be 7% or 15%?
c. If the T-bill rate is 7%, and the market return is equally likely to be 7% or 15%, what are the alphas of the two stocks?
Can you please explain well and provide the formula?
Is there any other way to solve in financial calcular ?
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