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Stock A has a required return of 12 percent. Stock B has a required return of 15 percent. Assume a risk-free rate of 4.75 percent.

Stock A has a required return of 12 percent. Stock B has a required return of 15 percent. Assume a risk-free rate of 4.75 percent. Which of the following is a correct statement about the two stocks?

Stock A is riskier.

Stock B is riskier.

The stocks have the same risk.

We would need to know if the markets are efficient to answer this question.

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