m. Problem 12-14 Expected Returns (LO2) Consider the following two scenarios for the economy and the expected returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. points Rate of Return Aggressive Defensive Market Stock A Stock D -5% 12 21 10 Scenario Bust Boom eBook -33 Print a. Find the beta of each stock. (Round your answers to 2 decimal places.) References Beta Stock A Stock D 1.76 0.87 b. If each scenario is equally likely, find the expected rate of return on the market portfolio and on each stock. (Enter your answers as a whole percent.) Expected Rate of Return Market portfolio Stock A Check my work Expected Rate of Return Market portfolio Stock A Stock D points eBook Print c. If the T-bill rate is 4%, what does the CAPM say about the fair expected rate of return on the two stocks? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) References Expected Rate of Return Stock A Stock D d. Which stock seems to be a better buy on the basis of your answers to (a) through (c)? Stock D Stock A