3-4: The Capital Market Line and the Security Market Line 3-5: Calculating Beta Coefficients Problem Walk-Through Problem 3-5 Characteristic Line and Security Market Line You are given the following set of data HISTORICAL RATES OF RETURN Year NYSE Stock X 1 - 26.5% - 14.0% 2 37.2 23.0 3 23.8 18.5 4 - 7.2 6.0 5 6.6 9.5 6 20.5 18.7 7 30.6 17.1 a.Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient. Round your answer to two decimal places. Beta = b.Determine the arithmetic average rates of return for Stock X and the NYSE over the period given. Calculate the standard deviations of returns for both Stock X and the NYSE. Round your answers to two decimal places. Stock X NYSE Average return, % % Standard deviation, % % c.Assume that the situation during Years 1 to 7 is expected to prevail in the future (i.e., , , and both x and bx in the future will equal their past values). Also assume that Stock X is in equilibrium - that is, it plots on the Security Market Line. What is the risk-free rate? Round your answer to two decimal places. %