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What are the required rates of return on stocks

Problem: You have observed the following returns over time. Assume that the risk free rate is 6% and the market risk premium is 5%.

Year Stock X Stock Y Market
2006 14% 13% 12%
2007 19% 7% 10%
2008 -16% -5% -12%
2009 3% 1% 1%
2010 20% 11% 15%

Q1. What are the betas for Stocks X and Y?

Q2. What are the required rates of return on Stocks X and Y?

Q3. What is the required rate of return on a portfolio consisting of 60% of Stock X and 40% of Stock Y?

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Solution Preview :

Prepared by a verified Expert

Managerial Economics: What are the required rates of return on stocks

Reference No:- TGS01751689

Have a Question? (oR Write a Review)

Recent Questions Asked Managerial Economics

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Solution Preview :

Prepared by a verified Expert

Managerial Economics: What are the required rates of return on stocks

Reference No:- TGS01751689

Recent Questions Asked Managerial Economics

Q : Incorporation in your acquisit project

Q : Personal information-risk or benefits of marketers

Q : Why investors demand high expected rates of return on stocks

Q : What are advantages-disadvantages of opening labour marketk

Q : What are the required rates of return on stocks

Q : Six steps to decision making

Q : Compute the current market price

Q : Proficient in ethics

Q : What is the coefficient of variation for each project

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