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Teaching Since: | Apr 2017 |
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MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
You have observed the following returns over time:
Year     Stock X       Stock Y      Market
2009Â Â Â Â Â 14%Â Â Â Â Â Â Â Â Â Â Â Â Â 13%Â Â Â Â Â Â Â Â Â Â 12%
2010Â Â Â Â 19Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 7Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 10
2011Â Â Â Â -16Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -5Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -12
2012Â Â Â Â Â Â 3Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1
2013Â Â Â Â Â Â 20Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 11Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 15
Assume that the risk free rate is 6% and the market premium is 5%
A. What are the betas of stocks X and Y?--Answer is bx = 1.3471; by = 0.6508
B What are the required rates of return on stocks X and Y?--Answer is rx = 12.7355%; ry = 9.254%
C. What is the required rate of return on a portfolio consisting of 8% of Stock X and 20% of stock Y? Answer is rp = 12.04%
YOU MUST SHOW DETAILED WORK AND FORMULAS TO SUPPORT the ANSWERS PROVIDED
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