Problem 11-08 Two stocks each currently pay a dividend of $1.10 per share. It is anticipated that both firms' dividends will grow annually at the rate of 6 percent. Firm A has a beta coefficient of 1.03 while the beta coefficient of firm B is 1.29. a. If U.S. Treasury bills currently yield 6 percent and you expect the market to increase at an annual rate of 8.7 percent, what are the valuations of these two stocks using the dividend-growth model? Do not round intermediate calculations. Round your answers to two decimal places. Stock A: $ Stock B: $ b. Why are your valuations different? The beta coefficient of stock B is higher, which indicates the stock's return is more volatile. c. If stock A's price were $50 and stock B's price were $55, what would you do? Stock A is overvalued and should not be purchased. Stock B is overvalued and should not be purchased.