The stock of Swanson, Inc., is expected to return 24% annually. The stock of Redford, Inc., is expected to return 32% annually. The beta of the Swanson stock is 1.80, and the beta of the Redford stock is 2.20. The risk-free rate of return is expected to be 2%, but the return on the market portfolio is 15%. The Problem & Following 2 Based on the Security Market Line (SML), what is the required rate of return for Swanson? Question 25 options:

The required rate of return for Swanson is 29.0%. The required rate of return for Swanson is 23.4%. The required rate of return for Swanson is 25.4%. The required rate of return for Swanson is 27.0%.

Question 26 (3.33 points) Saved Continued from the question above, based on the Security Market Line (SML), what is the required rate of return for Redford? Question 26 options:

The required rate of return for Bedford is 28.6%. The required rate of return for Bedford is 35.0%. The required rate of return for Bedford is 30.6%. The required rate of return for Bedford is 33.0%.

Question 27 (3.33 points) Saved Continued from above two questions, comparing the required rates of return calculated using SML with the expected returns provided, which security is a better buy? Question 27 options:

Redford is a better buy since the required rate of the return is greater than the expected return. Redford is a better buy since the required rate of the return is less than the expected return. Swanson is a better buy since the required rate of the return is greater than the expected return. Swanson is a better buy since the required rate of the return is less than the expected return.