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Historical Returns: Expected and Required Rates of Return You have observed the following returns over time: Year Stock X Stock Y Market 2015 13% 15%

Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time:

Year Stock X Stock Y Market
2015 13% 15% 14%
2016 19 8 12
2017 -13 -6 -10
2018 4 3 1
2019 22 10 18

Assume that the risk-free rate is 5% and the market risk premium is 4%.

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.

%?

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