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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%

  1. What are the betas of Stock A and Stock B?
  2. What are the required rate of returns of Stocks A and B?
  3. 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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