Consider the following table, which gives a security analyst's expected return on two stocks and the Market index in two scenarios: Scenario Probability0.50.5Market Return6% 16Aggressive Stock 2.1 %25 Defensive Stock3.6% ORequired:a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) Beta ABeta D? Helpb. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) Rate of return on A Rate of return on D%% Mcc. If the T-bill rate is 8%, what are the alphas of the two stocks? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Alpha Alpha D%
Consider the following table, which gives a security analyst's expected return on two stocks and the Market index in two scenarios: Scenario Probability0.50.5Market Return6% 16Aggressive Stock 2.1 %25 Defensive Stock3.6% ORequired:a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) Beta ABeta D? Helpb. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) Rate of return on A Rate of return on D%% Mcc. If the T-bill rate is 8%, what are the alphas of the two stocks? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Alpha Alpha D%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider the following table, which gives a security
analyst's expected return on two stocks and the Market
index in two scenarios: Scenario Probability0.50.5Market
Return6% 16Aggressive Stock 2.1 %25 Defensive Stock3.6%
ORequired:a. What are the betas of the two stocks?
(Round your answers to 2 decimal places.) Beta ABeta D?
Helpb. What is the expected rate of return on each stock?
(Round your answers to 2 decimal places.) Rate of return
on A Rate of return on D%% Mcc. If the T-bill rate is 8%,
what are the alphas of the two stocks? (Negative values
should be indicated by a minus sign. Do not round
intermediate calculations. Round your answers to 2
decimal places.) Alpha Alpha D%
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