Consider the following two scenarios for the economy and the expected returns in each scenario for...

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Finance

Consider the following two scenarios for the economy and theexpected returns in each scenario for the market portfolio, anaggressive stock A, and a defensive stock D.
Rate of Return
Scenario Market Aggressive
Stock A Defensive
Stock D
Bust –6 % –12 % –4 %
Boom 15 36 10

a. Find the beta of each stock. (Roundyour answers to 2 decimal places.)

b. If each scenario is equally likely, find theexpected rate of return on the market portfolio and on each stock.(Enter your answers as a whole percent.)

c. If the T-bill rate is 5%, what does the CAPMsay about the fair expected rate of return on the two stocks?(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places.)

d. Which stock seems to be a better buy on thebasis of your answers to (a) through (c)?
Stock D
Stock A

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Consider the following two scenarios for the economy and theexpected returns in each scenario for the market portfolio, anaggressive stock A, and a defensive stock D.Rate of ReturnScenarioMarketAggressiveStock ADefensiveStock DBust–6%–12%–4%Boom153610a. Find the beta of each stock. (Roundyour answers to 2 decimal places.)b. If each scenario is equally likely, find theexpected rate of return on the market portfolio and on each stock.(Enter your answers as a whole percent.)c. If the T-bill rate is 5%, what does the CAPMsay about the fair expected rate of return on the two stocks?(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places.)d. Which stock seems to be a better buy on thebasis of your answers to (a) through (c)?Stock DStock A