1. The annual (%) returns, assumed for years 2009-2019 (11-years) for both FedEx stock (FDX) and the NYSE Index, are shown below. The regression below to estimates the beta (B) for FDX: YEAR FedEx NYSE INDEX (FDX-Mean)(NYSE-Mean) 2009 -1.03% 13.48% 14.70 2010 -16.97 -4.92 171.53 2011 -47.64 41.11 2379.02 2012 96.64 41.55 3519.01 2013 3.00 12.06 -43.63 2014 0.96 -0.09 14.70 2015 6.64 9.59 -5.60 2016 36.5 14.04 346.95 2017 26.04 4.88 51.45 2018 7.06 3.75 -0.54 2019 -30.93 -16.55 715.49 Mean 7.38997 2.12 SUM 7163.07 Variance 1436.7 413.75 COVARIANCE 716.31 Std. Dev 37.90 20.34 CORRELATION 0.93 BETA 1.73 REGRESSION OUTPUT: Regression Statistics Multiple R 0.929009 R Square 0.863058 Adjusted R 0.847842 Standard E 14.7853 Observatio 11 ANOVA df SS MS F ignificance F Regression 1 12399.52 12399.52 56.72105 3.57E-05 Residual 9 1967.447 218.6052 Total 10 14366.96 Coefficientsandard Erret Stat P-value Lower 95% Upper 95%ower 95.0%pper 95.09 Intercept 3.717607 4.484525 0.828986 0.42855 -6.42709 13.86231 -6.42709 13.86231 X Variable 1.731149 0.229859 7.531338 3.57E-05 1.211171 2.251127 1.211171 2.251127 The beta, , calculated above for FDX is 1.73, the yield to maturity on a 10- year Treasury Bond (risk free rate) is 0.66% http://www.treasury gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data-yield The stock market risk premium [rm - Iu] is 5.5%. Using the Capital Asset Pricing Model (CAPM), calculate the cost of equity capital for FDX. FDX stock's required rate of return, using the Capital Asset Pricing Model: renx = - + [I'm - dBFDX l'Edx = (A) Please Explain what Beta (B) is and how is it used to determine the cost of equity capital? In this case for FDX. (B) Explain the significance of the cost of equity capital for FDX or any other stock