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5. The next expected dividend for Stock P is P5 and the current price of the stock is P30. The risk free rate is 3%,

5. The next expected dividend for Stock P is P5 and the current price of the stock is P30. The risk free rate is 3%, the market risk premium is 5.5%, and the stock's beta is 1.2.

a. What is the expected rate of return?

b. What is the required rate of return?

c. Why should an investor buy this stock?

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