HELP 5

The security market line is estimated to be k=6%+(12.8%6%) You are considering two stocks. The beta of A is 1.7. The firm offers a dividend yield during the year of 3 percent and a growth rate of 6.1 percent. The beta of B is 1.2. The firm offers a dividend yield during the year of 4.3 percent and a growth rate of 5.6 percent. a. What is the required return for each security? Round your answers to two decimal places. Stock A: % Stock B: % b. Why are the required rates of return different? The difference in the required rates of return is the result of being riskier. c. Since A offers higher potential growth, should it be purchased? Stock A be purchased. d. Since B offers higher dividend yield, should it be purchased? Stock B be purchased. e. Which stock(s) should be purchased? should be purchased