Assume these are the stock market and Treasury bill returns for a 5-year period: T-Bill Return Year Stock Market Return (8) (8) 2016 32.50 0.07 2017 11.80 0.07 2018 -2.40 0.07 2019 13.70 0.25 2020 22.40 0.27 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Complete this question by entering your answers in the tabs below.

Assume that the risk-free rate is 6.5% and the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place.   % What is the required rate of return on a stock with a beta of 0.6? Round your answer to one decimal place.   %

Stocks A and B have the following historical returns: Year 2016 2017 2018 2019 2020 Stock A's Returns, ra (15.40%) 29.00 14.25 (5.00) 26.00 Stock B's Returns, ra (15.80%) 21.10 37.30 (6.20) 12.45 a. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places. Stock A: Stock B: b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year Round your answers to two decimal places. Negative values should be indicated by a minus sign. Portfolio CV Year 2016 2017 2018 2019 2020 What would the average return on the portfolio have been during this period? Round your answer to two decimal places. % % % c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places. Stock A Stock B Portfolio Standard Deviation d. Calculate the coefficient of variation for each…

Review the following market information: Current Stock Market Return                    11.25% Current T-Bill Price                                       $979.43 Historic T-Bill Average Return                   2.80% Historic Stock Market Average Return     8.10% Stock Beta                                                     1.23 What is the required return (rounded to two places)?

Consider the following annual closing prices of stock A, values of market index (S&P 500) and Treasury bills rate. A B C с D Date Stock A Prices (in $) Market Index Value Risk Free Rate (in %) 2 Period 1 119 3 Period 2 100 11829 11843 9639 88 131 12854 9580 11640 8469 11412 9115 10682 NOSAWNH 1 4 Period 3 Period 4 6 Period 5 7 Period 6 8 Period 7 9 Period 8 10 Period 9 11 Period 10 12 O 1.1 13 What is the value of CAPM beta for stock A? O 1.4666 O 1.8333 O2.0533 82 113 O 0.3666 65 109 95 113 1.48 1.76 1.64 1.2 1.43 1.36 1.3 1.72 1.71 1.77

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Stocks A and B have the following historical returns: 2017 2018 2019 2020 Year Stock A's Returns, "A Stock B's Returns, r 2016 (23.80%) 22.50 (17.70%) 24.50 ITT 14.25 (2.25) 25.00 24.00 (9.70) 14.60 % a. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places. Stock A: Stock B: % b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Negative values should be Indicated by a minus sign. Year Portfolio 2016 % 2017 % 2018 % 2019 % 2020 % What would the average return on the portfolio have been during this period? Round your answer to two decimal places. % c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places. Standard Deviation Stock A % Stock B % Portfolio % d. Calculate the coefficient of…

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Assume these are the stock market and Treasury bill returns for a 5-year period:   Year   Stock Market Return (%) T-Bill Return (%) 2013   35.90 0.21         2014   15.20 0.21         2015   -5.10 0.21         2016   16.90 0.08         2017   25.90 0.10           a. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)       Year Risk Premium 2013   % 2014   % 2015   % 2016   % 2017   %     b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Assume that the risk-free rate is 7.5% and the market risk premium is 3%. What is the required return for the overall stock market? Round your answer to one decimal place.  _________ % What is the required rate of return on a stock with a beta of 1.8? Round your answer to one decimal place. _____________  %