Question: Excel Online Structured Activity: Historical Return: Expected and Required Rates of Return You have observed the following returns over time: Year Stock X Stock Y

Excel Online Structured Activity: Historical Return: Expected and Required Rates of Return You have observed the following returns over time:

Year	Stock X		Stock Y		Market
2011	13	%	13	%	12	%
2012	18		5		8
2013	-13		-2		-12
2014	4		2		2
2015	22		9		14

Assume that the risk-free rate is 3% and the market risk premium is 6%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet 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 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.

Excel Online Structured Activity: Historical Return: Expected and Required Rates of Return

File Home Insert Formulas Data Review View Help Tell me what you want to do Default Headings Keep Exit New Options Editing Reading View View New Freeze Window Panes Gridlines Sheet View Document views Window Show 317 fx E F A B C D 1 Historical Returns: Expected & Required Rates of Return 2 3 Historical Returns: 4 Year Stock X Stock Y Market 5 2011 13.00% 13.00% 12.00% 6 2012 18.00% 5.00% 8.00% 7 2013 -13.00% -2.00% -12.00% 8 2014 4.00% 2.00% 2.00% 9 2015 22.00% 9.00% 14.00% 10 11 Risk-free rate, IRF 3.00% 12 Market risk premium, RPM 6.00% 13 % of Stock X in Portfolio 80% 14 % of Stock Y in Portfolio 20% 15 16 Stock X Stock Y 17 Beta, b #N/A 18 Required rate of return, ri #NA 19 20 Portfolio beta, be #N/A 21 Required return on portfolio, rp #N/A 22 23 Alternate portfolio return calculation using individual stocks' required returns. Formulas #N/A #N/A

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