You Have Observed The Following Returns Over Time: YearStock XStock YMarket200613%14%14%200718592008-13-7-1220094322010211217 Assume That The Risk-Free Rate Is 3% And The Market Risk…

You have observed the following returns over time:

YearStock XStock YMarket
200613%14%14%
20071859
2008-13-7-12
2009432
2010211217

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

  1. What is the beta of Stock X? Round your answer to two decimal places.
      
    I. Stock Y is undervalued, because its expected return is below its required rate of return.
    II. Stock X is overvalued, because its expected return exceeds its required rate of return.
    III. Stock X is undervalued, because its expected return its exceeds required rate of return.
    IV. Stock Y is undervalued, because its expected return exceeds its required rate of return.
    V. Stock X is undervalued, because its expected return is below its required rate of return.

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