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Problem:

Stock R has a beta of 1.3, Stock S has a beta of 0.8, the expected rate of return on an average stock is 13%, and the risk-free rate of return is 7%.

Required:

By how much does the required return on the riskier stock exceed the required return on the less risky stock?

Explain comprehensively and provide step by step solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91147292

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