What are the required rates of return for stocks x and y

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Reference no: EM133335828

Question:

You have observed the following returns over time
Year StockX StockY. Market
2017. 14%. 13%. 12%
2018. 19. 7. 10
2019. -16. -5. -12
2020. 3. 1. 1
2021. 20. 11. 15

Assume that the risk - free rate is 3 % the market risk premium is 6 % , the beta for Stock X is 1.50 , and the beta for Stock Y is 0.46 a .
What are the required rates of return for Stocks X and Y ?
b . What is the required rate of return for a portfolio consisting of % of Stock X and 20 % of Stock Y ? If Stock X's expected return is 13 % , is Stock X under- or overvalued ?

Reference no: EM133335828

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