Question: PLEASE SHOW YOUR WORK AND FORMULAS, SO I CAN LEARN THIS MATERIAL. Problem 6-14 Historical Returns: Expected and Required Rates of Return You have observed

PLEASE SHOW YOUR WORK AND FORMULAS, SO I CAN LEARN THIS MATERIAL.

Problem 6-14 Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time:

Year Stock X Stock Y Market
2012 14% 13% 14%
2013 18 8 9
2014 -15 -8 -13
2015 3 3 1
2016 24 12 13

Assume that the risk-free rate is 4% and the market risk premium is 6%. Do not round intermediate calculations.

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

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

What is the required rate of return on Stock X? Round your answer to one decimal place. ___%

What is the required rate of return on Stock Y? 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? Round your answer to one decimal place. ___%

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