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

$201212\%11\%10\%$

$201318810$

$2014-12-3-12$

$2015531$

$201619918$

Assume that the risk$-$free rate is $6\%$ 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.