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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
6% 2.1% 3.6%
16 25 10

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% or 16%? (Round your answers to 2 decimal places.)

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

c. If the T-bill rate is 8%, and the market return is equally likely to be 6% or 16%, what are the alphas of the two stocks? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Alpha A %
Alpha D %

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