Historical Returns: Expected and Required Rates of Return Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time:

Assume that the risk$-$free rate is $6\%$ and the market risk premium is $4\%.$

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.

You have observed the following returns over time:

Year Stock X Stock Y Market

$201412\%11\%14\%$

$20152178$

$2016-15-4-10$

$2017421$

$201820918$

Assume that the risk$-$free rate is $6\%$ and the market risk premium is $4\%.$