Historical Returns: Expected and Required Rates of Return You have observed the following returns over time:
Year Stock x Stock Y Market
2011 12% 14% 14%
2012 19% 7% 10%
2013 -17% -5% -14%
2014 4% 1% 2%
2015 22% 13% 18%
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.
Please show calculation steps