Question
PLEASE SHOW YOUR WORK AND FORMULAS, SO I CAN LEARN THIS MATERIAL. Problem 6-14 Historical Returns: Expected and Required Rates of Return You have observed
PLEASE SHOW YOUR WORK AND FORMULAS, SO I CAN LEARN THIS MATERIAL.
Problem 6-14 Historical Returns: Expected and Required Rates of Return
You have observed the following returns over time:
| Year | Stock X | Stock Y | Market |
| 2012 | 14% | 13% | 14% |
| 2013 | 18 | 8 | 9 |
| 2014 | -15 | -8 | -13 |
| 2015 | 3 | 3 | 1 |
| 2016 | 24 | 12 | 13 |
Assume that the risk-free rate is 4% and the market risk premium is 6%. Do not round intermediate calculations.
What is the beta of Stock X? Round your answer to two decimal places. ___
What is the beta of Stock Y? Round your answer to two decimal places. ___
What is the required rate of return on Stock X? Round your answer to one decimal place. ___%
What is the required rate of return on Stock Y? Round your answer to one decimal place. ___%
What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y? Round your answer to one decimal place. ___%
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