Assume that the risk-free rate is 4% and the market risk premium is 2%. a. What are the betas of Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places. Stock X: Stock Y:   b.What are the required rates of return on Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places. Stock X: % Stock Y: %   c. 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 two decimal places.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You have observed the following returns over time:

 

 

Assume that the risk-free rate is 4% and the market risk premium is 2%.

a. What are the betas of Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places.

Stock X:

Stock Y:

 

b.What are the required rates of return on Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places.

Stock X: %

Stock Y: %

 

c. 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 two decimal places.

 

 

Year
2015
2016
2017
2018
2019
Stock X
16%
20
-15
4
24
Stock Y
13%
6
-3
2
9
Market
10%
8
-13
3
15
Transcribed Image Text:Year 2015 2016 2017 2018 2019 Stock X 16% 20 -15 4 24 Stock Y 13% 6 -3 2 9 Market 10% 8 -13 3 15
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