Problem $2-14($Historical Returns: Expected and Required Rates of Return$)$

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Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time:

Assume that the risk$-$free rate is $7\%$ and the market risk premium is $6\%.$

a$.$ What are the betas of Stocks $x$ and $Y?$ Do not round intermediate calculations. Round your answers to two decimal places.

Stock X:

Stock $Y$ :

b$.$ 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 $Y$ :

$\%$

c$.$ 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.

$\%$