If the risk-free rate of return were 7 and the return on, Financial Management

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If the risk-free rate of return were 7 and the return on

You are offered two stocks. The beta of A is 1.4 while the beta of B is 0.8. The growth rates of earnings and dividends are 10% and 5%, respectively. The dividend yields are 5% and 7%, respectively.

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

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

C) If the risk-free rate of return were 7% and the return on the market is expected to be 14%, which of these stocks should be bought?

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Financial Management: If the risk-free rate of return were 7 and the return on

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Financial Management: If the risk-free rate of return were 7 and the return on

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