For this question, do NOT assume the CAPM holds.

The following table gives a security analyst's estimates of expected returns for two shares, Aggressive and Defensive, and the market for two equally-likely scenarios:

Scenario Market Return Aggressive share Defensive share

1 5% 2% 3.5%

2 20% 32% 14%

What are the betas of the two shares?

If the risk-free rate is 2%, what is the alpha of each share?

Please provide detailed manual step-by-step solutions. Cannot use excel

Question

For this question, do NOT assume the CAPM holds.

The following table gives a security analyst's estimates of expected returns for two shares, Aggressive and Defensive, and the market for two equally-likely scenarios:

Scenario	Market Return	Aggressive share	Defensive share
1	5%	2%	3.5%
2	20%	32%	14%

What are the betas of the two shares?

If the risk-free rate is 2%, what is the alpha of each share?

Please provide detailed manual step-by-step solutions. Cannot use excel

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Question

For this question, do NOT assume the CAPM holds. The following table gives a security analyst's estimates of expected returns for two shares, Aggressive and

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