Problem 13 A late penalty of 10% will apply to new answers. Intro You've collected the following information for two stocks. Stock 1 Stock 2 0.5 1.4 Beta Dividend yield Growth rate 7% 2% 4% 8% The risk-free rate is 2% and the expected return on the market portfolio is 8% Attempt 1/4 for 9 pts Part 1 Without doing any calculations, which stock should you buy? Stock 1, because it has a higher dividend yield Stock 1, because it has a lower beta Neither stock Stock 2, because it has a higher growth rate Stock 2, because it has a higher beta Both stocks Not enough information provided Submit IB - Attempt 1/10 for 9 pts. Part 2 What is the required return for stock 1 based on the CAPM? 3+ decimals Submit IB Attempt 1/10 for 9 pts. Part 3 What is the required return for stock 2 based on the CAPM? 3+ decimals Submit - Attempt 1/4 for 9 pts Part 4 Which stock should you buy? Stock 1, because its required return is greater than stock 2's Neither stock Stock 2, because its required return is greater than stock 1's Both stocks Not enough information provided Submit Attempt 1/10 for 9 pts Part 5 What is the expected return for stock 1 based on the dividend growth model? 3+ decimals Submit Attempt 1/10 for 9 pts Part 6 What is the expected return for stock 2 based on the dividend growth model? 3+ decimals Submit - Attempt 1/4 for 9 pts. Part 7 Which stock should you buy? Stock 2, because its expected return is greater than stock 1's Neither stock Not enough information provided Both stocks Stock 1, because its expected return is is greater than stock 2's Stock 2, because its expected return is greater than its required return Stock 1, because its expected return is greater than its required return