What is expected rate of return on each stock

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Reference no: EM132007533

Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: Market Return Aggressive Stock Defensive Stock 5% –3% 3% 23 37 10 a. What are the betas of the two stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Beta Aggressive Stock Defensive Stock b. What is the expected rate of return on each stock if the market return is equally likely to be 5% or 23%? (Do not round intermediate calculations. Round your answers to 1 decimal place. Omit the "%" sign in your response.) Expected Rate of Return Aggressive Stock % Defensive Stock % e. What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firm’s stock if market return is equally likely to be 5% or 23%? Also, assume a T-Bill rate of 3%. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Hurdle rate %

Reference no: EM132007533

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