Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Historical Returns: Expected and Required Rates of Return You have observed the following returns over time: Year Stock X Stock Y Market 2 0 1

Historical Returns: Expected and Required Rates of Return
You have observed the following returns over time:
Year Stock X Stock Y Market
201516%14%10%
20161778
2017-18-2-12
2018533
2019231012
Assume that the risk-free rate is 4% and the market risk premium is 3%.
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.
%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Renewable Energy Finance Funding The Future Of Energy

Authors: Charles W Donovan

2nd Edition

1786348594, 9781786348593

More Books

Students also viewed these Finance questions

Question

What is the purpose of XML Web Services? AppendixLO1

Answered: 1 week ago