Stock X and the "market" have had the following rates of returns over the past four years. Year Stock X Market 1 12.00% 13.80% 2 5.00% 1.65% 3 11.00% 13.70% 4 -7.00% -2.72% 62% of your portfolio is invested in Stock X and the remaining 38% is invested in Stock Y. The risk-free rate is 5.24% and the market risk premium is also 5.24%. You estimate that 14.11% is the required rate of return on your portfolio. What is the beta of Stock Y?
A. 2.76
B. 2.91
C. 2.88
D. 2.41
E. 2.82
Answer: B
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