Question
Year Stock A Stock B Market 2012 11% 12% 15% 2013 18% 9% 11% 2014 5% 4% 6% 2015 -14% -7% -10% 2016 6% 3%
| Year | Stock A | Stock B | Market |
| 2012 | 11% | 12% | 15% |
| 2013 | 18% | 9% | 11% |
| 2014 | 5% | 4% | 6% |
| 2015 | -14% | -7% | -10% |
| 2016 | 6% | 3% | 5% |
| 2017 | 20% | 13% | 16% |
The table above shows the returns over the last six years.
The risk free rate is currently 4% and the market risk premium is 6%.
- Calculate the betas for stocks A and B
- Calculate the required rates of return for stocks A and B
If you created a portfolio with 65% of the weight invested in stock A and 35% of the weight invested in stock B,
what would be the required rate of return on the portfolio?
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The Everything Improve Your Credit Book
Authors: Justin Pritchard
1st Edition
1598691554, 978-1598691559
