You have observed the following returns over time:
Year
|
Stock X
|
Stock Y
|
Market
|
2006
|
13%
|
13%
|
13%
|
2007
|
21
|
6
|
12
|
2008
|
-13
|
-7
|
-12
|
2009
|
5
|
1
|
1
|
2010
|
24
|
9
|
15
|
Suppose that the risk-free rate is 3% and the market risk premium is 15%
- What is the beta of Stock X?
What is the beta of Stock Y?
b. What is the needed rate of return on Stock X?
What is the needed rate of return on Stock Y?