Historical Returns: Expected and Required Rates of Return You have observed the following returns over time: eBook Stock X: % Year 2015 2016 2017 2018 2019 % Stock X 14% 17 -17 2 24 Assume that the risk-free rate is 7% and the market risk premium is 6%. a. What are the betas of Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places. % Stock Y 12% 6 -2 3 10 Market 12% 9 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: -12 1 17 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.
Historical Returns: Expected and Required Rates of Return You have observed the following returns over time: eBook Stock X: % Year 2015 2016 2017 2018 2019 % Stock X 14% 17 -17 2 24 Assume that the risk-free rate is 7% and the market risk premium is 6%. a. What are the betas of Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places. % Stock Y 12% 6 -2 3 10 Market 12% 9 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: -12 1 17 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
Section: Chapter Questions
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Question
Transcribed Image Text:Historical Returns: Expected and Required Rates of Return
You have observed the following returns over time:
eBook
Stock X:
%
Year
2015
2016
2017
2018
2019
%
Stock X
14%
17
-17
2
24
Assume that the risk-free rate is 7% and the market risk premium is 6%.
a. What are the betas of Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places.
%
Stock Y
12%
6
-2
3
10
Market
12%
9
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:
-12
1
17
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.
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