You need to estimate the equity cost of capital for XYZ Corp. You have the following data available regarding past returns:
a. What was XYZ's average historical return? XYZ's average historical return was _________ %. (Round to one decimal place.)
b. Compute the market's and XYZ's excess returns for each year. The market's excess return for 2011 was -_____ %. (Round to the nearest integer.)
The market's excess return for 2012 was _____%. (Round to the nearest integer.)
XYZ's excess return for 2011 was _______%. (Round to the nearest integer.)
XYZ's excess return for 2012 was _________%. (Round to the nearest integer.)
Estimate XYZ's beta.
XYZ's beta is ________ . (Round to two decimal places.)
c. Estimate XYZ's historical alpha.
XYZ's historical alpha was _________%. (Round to one decimal place.)