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Stock A has a beta of 1.20, and its required return is 12.00%. Stock B's beta is 0.85. If the risk-free rate is 3.00%, the
Stock A has a beta of 1.20, and its required return is 12.00%. Stock B's beta is 0.85. If the risk-free rate is 3.00%, the market risk premium is _____ and the required rate of return on B's stock is _____. (Use the CAPM for stock A to compute the market risk premium and then the CAPM for stock B to get the stock Bs required return)
10.50%; 11.925% | ||
10.50%; 14.475% | ||
7.50%; 9.375% | ||
7.50%; 11.925% | ||
7.50%; 14.475% |
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