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Stock X has an expected return of 20 percent, a beta coefficient of 2.3. Stock Y has an expected return of 19 percent and a
Stock X has an expected return of 20 percent, a beta coefficient of 2.3. Stock Y has an expected return of 19 percent and a beta coefficient of 2.4. The risk-free rate is 1.8 percent and the required return on the overall market is 9 percent. On the basis of the two stocks expected and required returns, which stock(s) would be attractive to a diversified investor?
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