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Q2) Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on
Q2) Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the market. Assume the same likelihood (i.e., 50\%) or the two scenarios. a) What are the betas of the two stocks? ( 5 points) b) Plot the two securities on the SML graph. Assume that T-bill rate is 6%. (5 points) c) What are the alphas of each? ( 5 points)
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