Question

In: Finance

You are given the following set of data: Year NYSE Stock X 1 -26.5% -14% 2...

You are given the following set of data:

Year NYSE Stock X

1

 -26.5% -14%
2 37.2 23.0
3 23.8 17.5
4 -7.2 2.0
5 6.6 8.1
6 20.5 19.4
7 30.6 18.2

a. Determine Stock X beta coefficient

b. determine the arithmetic average rates of return for stock X and NYSE over the period given. Calculate the standard deviations of returns for both X and NYSE

c. assume the situation during years 1 to 7 is expected to prevail in the future. Also assume stock X is in equilibrium that is, its plots on the SML. What is the risk-free rate?

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.

jeff jeffy answered 4 months ago
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