Question
You are given the following set of data: HISTORICAL RATES OF RETURN Year NYSE Stock X 1 - 26.5% - 19.0% 2 37.2 16.0 3
You are given the following set of data:
| HISTORICAL RATES OF RETURN | ||||
| Year | NYSE | Stock X | ||
| 1 | - 26.5% | - 19.0% | ||
| 2 | 37.2 | 16.0 | ||
| 3 | 23.8 | 15.5 | ||
| 4 | - 7.2 | 3.0 | ||
| 5 | 6.6 | 9.1 | ||
| 6 | 20.5 | 19.4 | ||
| 7 | 30.6 | 19.5 | ||
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.
Open spreadsheet
- Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient. Do not round intermediate calculations. Round your answer to two decimal places.
Beta =
- Determine the arithmetic average rates of return for Stock X and the NYSE over the period given. Calculate the standard deviations of returns for both Stock X and the NYSE. Do not round intermediate calculations. Round your answers to two decimal places.
NYSE Stock X Average return, % % Standard deviation, % % - Assume that the situation during Years 1 to 7 is expected to prevail in the future. Also assume that Stock X is in equilibrium - that is, it plots on the Security Market Line. What is the risk-free rate? Do not round intermediate calculations. Round your answer to two decimal places.
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
8th Edition
1264098723, 978-1264098729
