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4. Problem 8.04 (expected and required rates of return) a. Assume that the risk free rate is 3.5% in the market risk premium is 8%.

4. Problem 8.04 (expected and required rates of return)

a. Assume that the risk free rate is 3.5% in the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place.

b. What is the required rate of return on a stock with a beta of 1.2? Round your answer to one decimal place.

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