Calculate the required rate of return on innovation shares

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Innovation Ltd.'s stock has a beta of 0.8. The Treasury bills are currently returning 2.5% p.a. and the expected return of the market portfolio is 9% p.a.

Problem 1: Explain in words what beta is. Comment on the beta of Innovation's stock relative to the market.

Problem 2: Calculate the required rate of return on Innovation's shares.

Reference no: EM132743464

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