QS) (Cost of Capital, Risk and Return) 20 Marks a) Suppose you have predicted the following returns for stocks X and Yin three possible states of nature. What are the expected returns? Y State Boom Probability 0.3 0.15 0.25 Text Predictions: On 1 of 4 617 words English (Canada) Calib bexty 14 A D DA A Suppose you have predicted the following returns for stocks X and Yin three possible states of nature. What are the expected returns? State Boom Normal Recession Probability 0.3 0.5 0.2 0.15 0.10 0.02 Y 0.25 0.20 0.01 b) A firm with an asset beta of 1.0 has a debt beta of zero when 20% of the capital structure is debt, and is estimated to have a debt of .15 if debt went as high as 50% of the capital structure. What is the equity beta under? a) Low debt b) High debt 11 words English (Canada) Text Predictions: On O i e here to search