Question
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.0%
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.
A. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.
CVx = ___
CVy = ___
B. Calculate each stock's required rate of return. Round your answers to two decimal places.
rx = ___%
ry = ___%
C. Calculate the required return of a portfolio that has $3,000 invested in Stock X and $7,500 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.
rp = ___%
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