Calculation of Beta Using Regression Analysis. You are given the following data for stock A and the market portfolio: Historic Rates of Return Year       r j (%)     r m (%) 20X0      1              2...

Calculation of Beta Using Regression Analysis. You are given the following data for stock A and the market portfolio:

Historic Rates of Return

Year       r_j
(%)     r_m
(%)

20X0      1              2

20X1      3             7

20X2      14           20

20X3      18           30

Assuming that the risk-free rate is 4 percent, compute (a) the beta coefficient and (b) the required rate of return to be used for capital budgeting decisions in 20X4 when the market rate of return is expected to be 18 percent?