QUESTION 9

1. You have observed the following returns over time.

   Year Stock X Stock Y Market

   2015 12% 11% 9%

   2016. 12% 5% 10%

   2017 -16% -7% -12%

   2018. 2% 1% 1%

   2019. 18% 12% 16%

   Assume that the risk-free rate is 6% and the market risk premium is 5%

   What is the beta of portfolio consisting of 70% stock X and 30% stock Y

   	a.	1.07
   	b.	1.2
   	c.	1.3
   	d.	1.25