you have observed the following returns over


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%

  1. 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?

 

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Financial Accounting: you have observed the following returns over
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