Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standar

Question

Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.


A. Calculate each stock's required rate of return. Round your answers to two decimal places.
d. rx = %
e. ry = %


B. Calculate the required return of a portfolio that has $4,500 invested in Stock X and $8,000 invested in Stock Y. Round your answer to two decimal places.
g. rp = %

Explanation / Answer

rx = 6% +0.8*5% =10.0% ry = 6% +1.1*5% =11.50% B = required return of a portfolio = (4500*10%+ 8000*11.5%)/(4500+ 8000)=10.96%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.