3Vid 8. Problem 8-9 REQUIRED RATE OF RETURN Stock R has a beta of 2.0, Stock S has a beta of 0.45, the required return on an average stock is 10%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Problem 8-14 PORTFOLIO BETA Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 0.80. What would your portfolio's new beta be? 1 Chapter 9: 1. Question 9-2 is the following equation correct for finding the value of a constant growth stock? Explain./ D. P,5 T.18 Question 9-3 If you bought a share of common stock, you would probably expect to receive dividends plus an eventual capital gain. Would the distribution between the dividend yield and the capital gains yield be influenced by the firm's decision to pay more dividends rather than to retain and reinvest more of its earnings? Explain. 1. Problem 9-2 CONSTANT GROWTH VALUATION Tresnan Brothers is expected to pay a $1.80 per share dividend at the end of the year (i.e., D, 5 $1.80). The dividend is expected to grow at a constant rate of 4% a ...vaan return on the stock... is 10%. What is the stock's current value per share