You are given the following information concerning a stock and the market:

	Returns
Year	Market			Stock
2008	17	%		29	%
2009	13			13
2010	20			3
2011	8			16
2012	35			16
2013	15			21

1.	Calculate the average return and standard deviation for the market and the stock. (Use excel to complete the problem. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

	Market	Stock
Average return	%	%
Standard deviation	%	%

2.	Calculate the correlation between the stock and the market, as well as the stocks beta. (Use excel to complete the problem. Do not round intermediate calculations. Round your Correlation answer to 2 decimal places and Beta answer to 4 decimal places.)

Correlation

Beta

3. A stock has an expected return of 11.5 percent, its beta is 1.40, and the risk-free rate is 3.4 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Expected return

%

4. Stock Y has a beta of .99 and an expected return of 8.33 percent. Stock Z has a beta of .90 and an expected return of 8 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Risk-free rate

%