What are the required rates of return for stocks x and yc

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You have observed the following returns over time:2005, Stock X (14%), Stock Y (13%), Market (12%). 2006, Stock X (19%), Stock Y (7%), Market (10%)2007, Stock X (-16%), Stock Y (-5%), Market (-12%). 2008, Stock X (3%), Stock Y (1%), Market (1%)2009, Stock X (20%), Stock Y (11%), Market (15%). Assume that the risk-free rate is 6% and the market risk premium is 5%. A) What are the betas of Stocks X and Y?B) What are the required rates of return for Stocks X and Y?C) What is the required rate of return for a portfolio consisting of 80% of Stock X and 20% of Stock Y?D) If Stock X's expected return is 22%, is Stock X under- or overvalued?

Reference no: EM13478354

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