Problem 11-07 The security market line is estimated to be k=5% + (11% - 5%). You are considering two stocks. The beta of A is 1.6. The firm offers a dividend yield during the year of 4 percent and a growth rate of 8.5 percent. The beta of B is 1.8. The firm offers a dividend yield during the year of 5.8 percent and a growth rate of 7.8 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 -Select- being riskier. C. Since A offers higher potential growth, should it be purchased? Stock A -Select- be purchased. d. Since B offers higher dividend yield, should it be purchased? Stock B -Select- be purchased. e. Which stock(s) should be purchased? -Select- should be purchased