6. (Risk Measurement and Rates of Return): to. Given the following holding period returns, determine the average returns and standard deviations for Corporation XYZ and for the market. XYZ Market Corporation Month 1. 6% 4% 2. 3% 2% 3. -1% 1% 4. -3% -2% 5. 5% 2% 6. 0% 2%

b. If XYZ has a Beta of 1.54 and the risk-free rate is 8%, what will be an appropriate required return for XYZ? (Returns must be annualized, and multiplied by 12 to make them compatible with risk-free rates).

c. How does XYZ's historical average return compare to what you think is fair, given the firm's systematic risk?