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Expected returns on two stocks for particular market returns are given in the following table: Market Return Aggressive Defensive 7% 4% 9% 25% 40% 18% You are required to calculate:

(a) The Betas of the two stocks.

(b) Expected return of each stock, if the market return is equally likely to be 7% or 25%.

(c) The Security Market Line (SML), if the risk free rate is 7.5% and market return is equally likely to be 7% or 25%.

(d) The Alphas of the two stocks.

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