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Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the
Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the market a. What are the betas of the two stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock if the two scenarios for the market return are equally likely to be 6% or 22% ? (Do not round intermediate calculations. Round your answers to 1 decimal place.) e. What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of defensive firm's stock if the two scenarios for the market return are equally likely? Also, assume a T-Bill rate of 4%. (Do no intermediate calculations. Round your answer to 2 decimal places.)
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