The security market line is estimated to be

$k=6\%+(9\mathrm{.}1\%-6\%).$

You are considering two stocks. The beta of $A$ is $1\mathrm{.}5.$ The firm offers a dividend yield during the year of $5$ percent and a growth rate of $6\mathrm{.}2$ percent. The beta of $B$ is $1\mathrm{.}9.$ The firm offers

a dividend yield during the year of $5\mathrm{.}8$ percent and a growth rate of $5\mathrm{.}2$ percent.

a$.$ What is the required return for each security? Round your answers to two decimal places.

Stock A: $,\%$

Stock B: $,\%$

b$.$ Why are the required rates of return different?

The difference in the required rates of return is the result of

being riskier.

c$.$ Since A offers higher potential growth, should it be purchased?

Stock A

be purchased.

d$.$ Since B offers higher dividend yield, should it be purchased?

Stock E

$]$ be purchased.

e$.$ Which stock$($s$)$ should be purchased?

should be purchased.The security market line is estimated to be

k$=6\%+(9\mathrm{.}1\%-6\%)\backslash$beta $.$

You are considering two stocks. The beta of A is $1\mathrm{.}5.$ The firm offers a dividend yield during the year of $5$ percent and a growth rate of $6\mathrm{.}2$ percent. The beta of B is $1\mathrm{.}9.$ The firm offers a dividend yield during the year of $5\mathrm{.}8$ percent and a growth rate of $5\mathrm{.}2$ percent.

$*$

$*$ What is the required return for each security? Round your answers to two decimal places.

$*$Stock A:$\%$Stock B:$\%$

$*$ Why are the required rates of return different?$$The difference in the required rates of return is the result of$($Stock A or Stock B$,$ choose one.$)$being riskier.$$

$*$ Since A offers higher potential growth, should it be purchased?

$*$Stock A$($should or should not, choose one.$)$be purchased.$$

$*$ Since B offers higher dividend yield, should it be purchased?

$*$Stock B$($should or should not, choose one.$)$ be purchased.$$

$*$ Which stock$($s$)$ should be purchased?

$*($Stock A$,$ Stock B$,$ Neither of stocks, or Both stocks.... Choose one.$)$should be purchased.