Historical Returns: Expected and Required Rates of Return Historical Returns: Expected and Required Rates of

Return

You have observed the following returns over time:

Assume that the risk$-$free rate is $7\%$ and the market risk

premium is $6\%.$

a$.$ What are the betas of Stocks $x$ and $Y?$ Do not round

intermediate calculations. Round your answers to two

decimal places.

Stock X:

Stock Y:

b$.$ What are the required rates of return on Stocks $x$ and

Y$?$ Do not round intermediate calculations. Round your

answers to two decimal places.

Stock X:

$\%$

Stock Y:

$\%$

c$.$ What is the required rate of return on a portfolio

consisting of $80\%$ of Stock $x$ and $20\%$ of Stock Y$?$ Do

not round intermediate calculations. Round your

answer to two decimal places.

You have observed the following returns over time:

Year Stock X Stock Y Market

$201512\%14\%12\%$

$20161758$

$2017-12-2-13$

$2018313$

$2019231314$

Assume that the risk$-$free rate is $7\%$ and the market risk premium is $6\%.$

What are the betas of Stocks X and Y$?$ Do not round intermediate calculations. Round your answers to two decimal places.

Stock X:

Stock Y:

What are the required rates of return on Stocks X and Y$?$ Do not round intermediate calculations. Round your answers to two decimal places.

Stock X:

$\%$

Stock Y:

$\%$

What is the required rate of return on a portfolio consisting of $80\%$ of Stock X and $20\%$ of Stock Y$?$ Do not round intermediate calculations. Round your answer to two decimal places.