Problem 11-07 The security market line is estimated to be k=7% (12.2% -7%). You are considering two stocks. The beta of A is 1.7. The firm offers a dividend yield during the year of 6 percent and a growth rate of 7.1 percent. The beta of B is 1.4. The firm offers a dividend yield during the year of 8 percent and a growth rate of 6.6 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 stock A being riskier. c. Since A offers higher potential growth, should it be purchased? Stock A should not be purchased. d. Since B offers higher dividend yield, should it be purchased? Stock B should be purchased. e. Which stock(s) should be purchased? Stock B should be purchased.