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The security market line is estimated to be k-8% + (11.4%-8%)I, You are considering two stocks. The beta of A is 1.1. The firm offers

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The security market line is estimated to be k-8% + (11.4%-8%)I, You are considering two stocks. The beta of A is 1.1. The firm offers a dividend yield during the year of 6 percent and a growth rate of 7.1 percent. The beta of B is 1.5. The firm offers a dividend yield during the year of 7.9 percent and a growth rate of 6.3 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 Select being riskier C. Since A offers higher potential growth, should it be purchased? Stock A Select be purchased d. Since B offers higher dividend yield, should it be purchased Stock B Selectbe purchased. e. Which stock(s) should be purchased? should be purchased

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