Stock A's stock has a beta of 1.30, and its required return is 13.75%. Stock B's beta is 0.80. If the risk-free rate is 2.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Do not round your intermediate calculations.
A. 9.33%
B. 9.52%
C. 10.66%
D. 11.33%
E. 8.57%
Answer: B
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