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Assume the risk-free rate is 4.1% and expected market return is 10.2%. Suppose that you have observed the following returns over time: Year Stock A
Assume the risk-free rate is 4.1% and expected market return is 10.2%. Suppose that you have observed the following returns over time:
Year | Stock A | Stock B | Market |
2012 | 5% | 14% | 12% |
2013 | 7% | 15% | 10% |
2014 | -9% | -17% | -12% |
2015 | 1.5% | 3% | 1% |
2016 | 10% | 18% | 15% |
2017 | 17.5% | 24.5% | 20% |
- What are the betas of Stock A and Stock B?
- What are the required rate of returns of Stocks A and B?
- What is the required rate of return on a portfolio that consists of 60% of A and 40% of B?
Please show work in excel (with formulas)
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