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Can u solve it ASAP plz (Chapter 9) 3 Application 1. The risk-free rate is 2% and the market risk premium is 5%. Stock A

Can u solve it ASAP plz

(Chapter 9) 3 Application 1. The risk-free rate is 2% and the market risk premium is 5%. Stock A has a beta of 1.5 and Stock B has a beta of 0.7. (a) What is the required return on each stock? (b) Assume that investors become more risk-averse. So the market risk premium rises from 5% to 8%. Assume that the risk-free rate remains constant. What effect will this have on the required rates of return of the two stocks. (Chapter 8) 19

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