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Please help me address the question, below. I need to calculate the betas of stocks A 7 B and required rates of return. You have

Please help me address the question, below. I need to calculate the betas of stocks A 7 B and required rates of return.

image text in transcribed You have observed the following returns over time: Year Stock A Stock B Market 1986 14.000% 15.000% 21.115% 1987 1988 11.000% -2.500% 9.000% 5.000% 18.203% 11.841% 1989 14.000% 7.500% 12.750% 1990 1991 20.000% 21.500% 13.500% 14.000% 26.383% 30.927% 1992 22.400% 13.500% 28.201% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 19.900% 21.100% 24.000% 26.300% 25.500% 22.100% 13.500% 6.400% -1.100% -4.000% 6.500% 7.400% 9.900% 14.400% 16.700% 18.800% 19.700% 21.100% 23.400% 11.500% 8.800% 4.200% 5.600% 6.800% 8.700% 9.900% 22.747% 20.021% 25.474% 23.656% 24.565% 26.383% 25.474% 17.294% 6.388% 6.842% 12.750% 17.294% 20.021% Assume the risk-free rate is 3.55% and the market risk premium is 4.60%. INPUT Market Risk DATA rRF 3.55% Premium 4.60% a. What are the betas of Stocks A and B? A B b. What are the required rates of return for Stocks A and B? rA rB c. What is the required rate of return for a portfolio consisting of 40% A and 60% B? INPUT DATA wA 40.00% rp d. Stock A is trading at a price consistent with the security market line. If your analysis suggests that Stock A will provide a return above the SML, does your

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