Question
In: Finance
You have observed the following returns over time: Year Stock X Stock Y Market 2011 13...
You have observed the following returns over time:
| Year | Stock X | Stock Y | Market | |||
| 2011 | 13 | % | 11 | % | 10 | % |
| 2012 | 20 | 7 | 9 | |||
| 2013 | -13 | -6 | -10 | |||
| 2014 | 3 | 1 | 1 | |||
| 2015 | 20 | 11 | 17 | |||
Assume that the risk-free rate is 4% and the market risk premium is 6%.
-
What is the beta of Stock X? Do not round intermediate calculations. Round your answer to two decimal places.
What is the beta of Stock Y? Do not round intermediate calculations. Round your answer to two decimal places.
-
What is the required rate of return on Stock X? Do not round intermediate calculations. Round your answer to one decimal place.
%
What is the required rate of return on Stock Y? Do not round intermediate calculations. 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? Do not round intermediate calculations. Round your answer to one decimal place.
%
Solutions
Expert Solution
Given,
| Year | Stock X | Stock Y | Market | |||
| 2011 | 13 | % | 11 | % | 10 | % |
| 2012 | 20 | 7 | 9 | |||
| 2013 | -13 | -6 | -10 | |||
| 2014 | 3 | 1 | 1 | |||
| 2015 | 20 | 11 | 17 | |||
Risk free rate = 4%
Market risk premium = 6%
Solution :-
jeff jeffy answered 3 months agoRelated Solutions
You have observed the following returns over time: Year Stock X Stock Y Market 2011 15...
You have observed the following returns over time:
Year Stock X Stock Y Market
2011 15 % 14 % 12 %
2012 20 7 8
2013 -13 -4 -12
2014 3 1 1
2015 21 11 14
Assume that the risk-free rate is 4% and the market risk
premium is 6%. The data has been collected in the Microsoft Excel
Online file below. Open the spreadsheet and perform the required
analysis to answer the questions below.
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You have observed the following returns over time: Year Stock X Stock Y Market 2015...
You have observed the following returns over time:
Year
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Stock Y
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2015
15%
14%
13%
2016
18
5
9
2017
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-3
-11
2018
2
2
2
2019
20
12
17
Assume that the risk-free rate is 6% and the market risk premium
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Stock Y:
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Expected and Required Rates of Return
You have observed the following returns over time:
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Stock Y
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2015
14
%
14
%
10
%
2016
18
8
8
2017
-17
-5
-11
2018
5
2
3
2019
24
8
14
Assume that the risk-free rate is 5% and the market risk premium
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What are the betas of Stocks X and Y? Do not round intermediate
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Stock X...
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Historical Returns: Expected and Required Rates of Return
You have observed the following returns over time:
Year
Stock X
Stock Y
Market
2011
13%
13%
13%
2012
17
7
12
2013
-13
-5
-13
2014
4
2
2
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19
13
12
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
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What is the beta of...
You have observed the following returns over time: Assume the risk-free rate is 3.55% and the...
You have
observed the following returns over time:
Assume the risk-free
rate is 3.55% and the market risk premium is 4.60%.
Year
Stock A
Stock B
Market
INPUT DATA
rRF
3.55%
Market Risk Premium
4.60%
1997
14.000%
15.000%
13.143%
a. What are the betas of Stocks A and
B?
1998
11.000%
9.000%
11.029%
bA
bB
1999
-2.500%
5.000%
4.109%
2000
14.000%
7.500%
5.097%
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2001
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19.926%...
Use the following returns for X and Y. Returns Year X Y 1 21.9 % 26.7...
Use the following returns for X and
Y.
Returns
Year
X
Y
1
21.9
%
26.7
%
2
–
16.9
–3.9
3
9.9
28.7
4
19.8
–14.8
5
4.9
32.7
Calculate the average returns for X and Y.
(Do not round intermediate calculations and enter your
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Calculate the variances for X and Y. (Do
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Use the following returns for X and Y. Returns Year X Y 1 22.0 % 27.0...
Use the following returns for X and Y. Returns Year X Y 1 22.0 %
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Requirement 1: Calculate the average returns for X and Y. (Do not
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You are given the following information concerning a stock and the market: Returns Year Market Stock...
You are given the following information concerning a stock and
the market:
Returns
Year
Market
Stock
2011
14
%
26
%
2012
10
10
2013
20
3
2014
−15
−31
2015
35
16
2016
15
18
a. Calculate the average return and standard
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b. Calculate the correlation between the stock
and the market, as well as the stock’s beta.
You run a regression of X’ Company stock's returns against the market returns over a five-year...
You run a regression of X’ Company stock's returns against the
market returns over a five-year time period (using monthly data)
and come up with the following output: Intercept = .20%, Slope =
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40% whereas the market standard deviation was only 20%. The
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You run a regression of X’ Company stock's returns against the market returns over a five-year...
You run a regression of X’ Company stock's returns
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monthly data) and come up with the following output: Intercept =
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Your stock had an annualized standard deviation of
returns of 40% whereas the market standard deviation was only 20%.
The annualized risk-free rate, on average, over the last five years
has been 6% and it is currently at 7%. The risk premium = 8.5%. The
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