You are given the following set of data: Historical Rates of Return Year 1. 2. 3. 4. 5. 6. 7 NYSE -26.5%, 37.2, 23.8, -7.2, 6.6, 20.5, 30.6 Stock 10%, 25, 12.5, 5.0, 9.9, 15.6, 16.3

Assume that the situation during Years 1 to 7 is expected to prevail in the future (i.e., rX 5 rX,Average, rM 5 rM,Average, and both sX and bX in the future will equal their past values). Also assume that Stock X is in equilibriumthat is, it plots on the Security Market Line. What is the risk-free rate?

You are given the following set of data: a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient. b. 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. c. Assume that the situation during Years 1 to 7 is expected to prevail in the future (i.e., r^X=rX,Average,r^M=rM,Average and both X and bX in the future will equal their past values). Also assume that Stock X is in equilibriumthat is, it plots on the Security Market Line. What is the risk-free rate