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Let rd =required rate of return on debt,rps =required rate of return on preferred stock, and rcs= required rate of return on common stock. According

Let rd =required rate of return on debt,rps =required rate of return on preferred stock, and rcs= required rate of return on common stock. According to the risk-return relationship, which of the following is correct?

  1. rd >rcs
  2. rps >rcs> rd
  3. rcs< rps
  4. rps<rcs< rd
  5. rd

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