Given the following information: Expected return for the market, 12 percent; Standard deviation of market return, 21perceni;

Question:

Given the following information:

Expected return for the market, 12 percent; Standard deviation of market return, 21perceni; Risk-free rate, 8 percent; Correlation coefficient between Stock A and the market, 0.8; Stock B and the market, 0.6; Standard deviation for stock A, 25 percent; Standard deviation for stock B, 30 percent.

a. Calculate the beta for stock A and stock B.

b. Calculate the required return for each stock.