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Question 4 (5 points) Consider the following table, which gives a security analysts expected return on two stocks for two particular market returns: Market Return
Question 4 (5 points) Consider the following table, which gives a security analysts expected return on two stocks for two particular market returns: Market Return 5% 20 Aggressive Stock 2% 32 Defensive Stock 3.5% 14 a. What is the beta of the two stocks? b. What is the expected rate of return on each stock if the market return is equally likely to be 5% or 20%? c. If the T-bill rate is 8%, and the market return is equally likely to be 5% or 20%, draw the SML for this economy. d. Plot the two securities on the SML graph. What are the alphas of each
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