Historical Rates of Return Year NYSE -26.5% Stock X -14.0% 23.0 37.2 23.8 -7.2 17.5 va ust w N 2.0 8.1 6.6 20.5 19.4 30.6 18.2 a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient. 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. c. Assume that the situation during Years 1 to 7 is expected to prevail in the future (i.e., x = Txet, fy = rm Avers, and both o, and b, 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? d. Plot the Security Market Line. e. Suppose you hold a large, well-diversified portfolio and are considering adding to that portfolio either Stock X or another stock, Stock Y, which has the same beta as Stock X but a higher standard deviation of returns. Stocks X and Y have the same expected returns: fx = f = 10.6%. Which stock should you choose