Riskier stock exceed the required return on less risky stock

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Reference no: EM132061526

1. You are considering investing in a mutual fund. The fund is expected to earn a return of 14 percent in the next year. If its annual return is normally distributed with a standard deviation of 4.9 percent, what return can you expect the fund to beat 95 percent of the time? (Round answer to 2 decimal places, e.g. 52.75%.)

2. Stock A has a beta of 1.2 , stock B has a beta of .6, the expected rate of return on an average stock is 12%, and the risk-free rate of return is 7%. By how much does the required return on the riskier stock exceed the required return on the less risky stock?

Reference no: EM132061526

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