Question: Using monthly returns from 1990-2001, you estimate that WalMart's beta is 1.89 (std err = 0.28) and Tiffany's beta is 0.61 (std err = 0.12).

Using monthly returns from 1990-2001, you estimate that WalMart's beta is 1.89 (std err = 0.28) and Tiffany's beta is 0.61 (std err = 0.12). If these estimates are a reliable guide going forward, what expected rate of return should you require for holding each stock?

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