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Problem:

Stock R has a beta of 1.2, Stock S has a beta of 0.40, the expected rate of return on an average stock is 12%, and the risk-free rate is 6%.

Required:

By how much does the required return on the riskier stock exceed the required return on the riskier stock exceed that on the less risky stock? Please provide step by step solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146146

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