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please help me to answer this question based on the table. Thank You Consider the following table, which gives a security analysts expected return on
please help me to answer this question based on the table. Thank You
Consider the following table, which gives a security analysts expected return on two stocks in two particular scenarios for the rate of return on the market:
Market Return | Aggressive Stock | Defensive Stock | |||
6 | % | 4 | % | 7 | % |
23 | 37 | 11 | |||
What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firms stock if the two scenarios for the market return are equally likely? Also, assume a T-Bill rate of 7%.
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