Risk and return $($Answer all parts of this question.$)$

Consider the following table, which gives a security analyst's expected return on

two stocks for two particular market environments.

$($a$)(2$P$)$ What are the betas of the two stocks?

$($b$)(4$P$)$ What is the expected rate of return on each stock if the market return is

equally likely to be $5\%$ or $25\%?$

$($c$)(4$P$)$ If the T$-$bill rate is $6\%$ and the market return is equally likely to be $5\%$

or $25\%,$ draw the SML for this economy.

$($d$)(6$P$)$ Plot the two securities on the SML graph. What are the alphas of each

stock?

$($e$)(4$P$)$ Briefly discuss the implications of the efficient market hypothesis for in$-$

vestment policy as it applies to

i$.$ technical analysis in the form of charting, and

ii$.$ fundamental analysis.