Question
You have observed the following returns over time: Year Stock X Stock Y Market 2011 14 % 13 % 12 % 2012 17 6 10
You have observed the following returns over time:
| Year | Stock X | Stock Y | Market | |||
| 2011 | 14 | % | 13 | % | 12 | % |
| 2012 | 17 | 6 | 10 | |||
| 2013 | -13 | -4 | -11 | |||
| 2014 | 2 | 2 | 2 | |||
| 2015 | 21 | 12 | 12 | |||
Assume that the risk-free rate is 4% and the market risk premium is 6%.
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What is the beta of Stock X? Do not round intermediate calculations. Round your answer to two decimal places.
What is the beta of Stock Y? Do not round intermediate calculations. Round your answer to two decimal places.
-
What is the required rate of return on Stock X? Do not round intermediate calculations. Round your answer to one decimal place.
%
What is the required rate of return on Stock Y? Do not round intermediate calculations. Round your answer to one decimal place.
%
-
What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y? Do not round intermediate calculations. Round your answer to one decimal place.
%
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Financial Modeling
Authors: Simon Benninga
4th Edition
0262027283, 9780262027281
