Question: In the table below you have given returns for share X, share Y and the market Year Average annual returns Share X Share Y Market
In the table below you have given returns for share X, share Y and the market
|
Year | Average annual returns | ||
| Share X | Share Y | Market return | |
| 1 | 12% | 22% | 15% |
| 2 | 9% | 8% | 13% |
| 3 | 7% | 19% | 14% |
| 4 | -1% | -10% | -9% |
| 5 | 11% | 20% | 12% |
| 6 | 4% | 13% | 9% |
Calculate the value of: total risk, relative risk and systematic risk for shares X and Y from the information given in the above table.
Calculate the required rate of return for each share assuming that the risk-free rate of return is 6% p.a. (based this on the CAPM methodology).
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