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Please help mee Problem 1 Consider the following table, which gives a security calyst's expected return on two stocks in two particular scenarios for the
Please help mee
Problem 1 Consider the following table, which gives a security calyst's expected return on two stocks in two particular scenarios for the rate of return on the market Market Return Stock A Stock B -5% Scenario Probability of serarlo Recession 40% Boom 60% On -10% 35% 20% 10% What are the beas of the two wocks? b. What is the expected rate of return on each stock if the two scenarios for the market return has probabilities of 40% for the recession and 60% for boom? c. If the T-bill rate is 5% and the market return has probabilities of 40% for the recesion and 60% for boom, draw the SML for this conomy 4. Plot the two securities on the SML graph. What are the alphas of each? c. Which of the two securities you are better off purchasing. A or B Step by Step Solution
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