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4. Innovation Ltd.s stock has a beta of 0.8. The Treasury bills are currently returning 2.5% p.a. and the expected return of the market portfolio

4. Innovation Ltd.s stock has a beta of 0.8. The Treasury bills are currently returning 2.5% p.a. and the expected return of the market portfolio is 9% p.a.

Explain in words what beta is. Comment on the beta of Innovations stock relative to the market. (3 marks)
Calculate the required rate of return on Innovations shares. (3 marks)

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