Problem 6-13 TUTOR WILL YOU PLACE THE HOMEWORK ON A EXCEL SPREADSHEET , THANK YOU"

Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time

Year Stock X Stock Y Market

2006 14% 11% 12%

2007 18 6 8

2008 -12 -8 -13

2009 5 2 2

2010 18 12 12

Assume that the risk-free rate is 3% and the market risk premium is 14%

QUESTION: What is the required rate of return on Stock X? Round your answer to two decimal places.

_____________ %

What is the required rate of return on Stock Y? Round your answer to two decimal places.

______________

Historical Returns: Expected and Required Rates of Return

You have observed the following returns over time

Year Stock X Stock Y Market

2006 14% 11% 12%

2007 18 6 8

2008 -12 -8 -13

2009 5 2 2

2010 18 12 12

Assume that the risk-free rate is 3% and the market risk premium is 14%

QUESTION: What is the required rate of return on Stock X? Round your answer to two decimal places.

_____________ %

What is the required rate of return on Stock Y? Round your answer to two decimal places.

______________

#### Top Answer

Dear Student Please find... View the full answer