What is the required rate of return on a portfolio

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Reference no: EM132789135

Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time:

Year Stock X Stock Y Market

2012 13% 13% 13%

2013 18 8 12

2014 -16 -3 -11

2015 5 3 3

2016 22 12 13

Assume that the risk-free rate is 4% and the market risk premium is 7%. Do not round intermediate calculations.

Question 1: What is the beta of Stock X? Round your answer to two decimal places.

Question 2: What is the beta of Stock Y? Round your answer to two decimal places.

Question 3: What is the required rate of return on Stock X? Round your answer to one decimal place.

Question 4: What is the required rate of return on Stock Y? Round your answer to one decimal place.

Question 5: What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y? Round your answer to one decimal place.

Reference no: EM132789135

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