Question: Please explain answer with no excell calculations. Provide formulas and steps to calculate Betas 2 MBA5903 MAYIJUNE 2017 Question 1 [20 marks] Stock Year 2012

Please explain answer with no excell calculations. Provide formulas and steps to calculate Betas

2 MBA5903 MAYIJUNE 2017 Question 1 [20 marks] Stock Year 2012 2013 2014 2015 2016 Stock X 14% 19 -16 Market 12% 10 12 1396 7 -5 20 15 The above table provides returns over time Assume that the risk-free rate is 6% and the market risk premium is 5%. 1.1. What are the betas of Stocks X and Y? 1.2. What are the required rates of retun on Stocks X and Y? 1.3, what is the required rate on a portfolio consisting of 80% of Stock X and 20% of Stock Y? (4)

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