You are considering two stocks. The beta of A is $1\mathrm{.}4.$ The firm offers a dividend yield during the year of $4$ percent and a growth rate of $8\mathrm{.}4$ percent. The beta of B is $1\mathrm{.}7.$ The firm offers a dividend yield during the year of $5\mathrm{.}9$ percent and a growth rate of $7\mathrm{.}5$ 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

$-$Select$-$

being riskier.

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

Stock A

$-$Select$-$

be purchased.

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

Stock B

$-$Select$-$

be purchased.

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

$-$Select$-$

should be purchased.