past $10$ years.

$($Click on the icon here $$ in order to copy the contents of the data table below into a spreadsheet.$)$

Return Data for Assets $x$ and Y$,2003-2012$

Asset $x$

Asset $Y$

rate is currently $7\mathrm{.}0\%$ and that the market return is $10\mathrm{.}0\%.$

To Do

a$.$ Calculate the annual rate of return for each asset in each of the $10$ preceding years, and use those values to find the average annual return for each asset over the $10-$year period.

b$.$ Use the returns calculated in part $($a$)$ to find $(1)$ the standard deviation and $(2)$ the coefficient of variation of the returns for each asset over the $10-$year period $2003-2012.$

c$.$ Use your findings in parts $($a$)$ and $($b$)$ to evaluate and discuss the return and risk associated with each asset. Which asset appears to be preferable? Explain.

d$.$ Use the CAPM to find the required return for each asset. Compare this value with the average annual returns calculated in part $($a$).$

the risk of each asset.

f$.$ Rework parts $($d$)$ and $($e$)$ under each of the following circumstances:

$(1)$ A rise of $1\mathrm{.}0\%$ in inflationary expectations causes the risk$-$free rate to rise to $8\mathrm{.}0\%$ and the market return to rise to $11\mathrm{.}0\%.$

$(2)$ As a result of favorable political events, investors suddenly become less risk$-$averse, causing the market return to drop by $1\mathrm{.}0\%,$ to $9\mathrm{.}0\%.$