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What is the Required Rate of Return? You have observed the following returns over time: Year 2011 2012 2013 2014 2015 Stock X Stock Y

What is the Required Rate of Return?

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You have observed the following returns over time: Year 2011 2012 2013 2014 2015 Stock X Stock Y Market 14% 18 16 12% 10% 20 17 Assume that the risk-free rate is 5% and the market risk premium is 6%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. a. what is the beta of Stock X? Do not round intermediate calculations. Round your answer to two decimal places. 1.31 What is the beta of Stock Y? Do not round intermediate calculations. Round your answer to two decimal places. 54 b. What Is the required rate of return on Stock X? Do not round intermediate calculations. Round your answer to one decimal place. 12.9 % What is the required rate of return on Stock Y? Do not round intermediate calculations. Round your answer to one decimal place. c. what is the required rate of return on a portfolio consisting of 80% of Stock and 20% of Stock Y? Do not round intermediate calculations. Round your answer to one decimal place. 11.960 %

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