Question: Stock Q has a beta ( B ) equal to 1 . 6 , and Stock P has a beta equal to o . 8

Stock Q has a beta (B) equal to 1.6, and Stock P has a beta equal to o.8. Based on this information, according to the capital asset pricing model (CAPM), which of the following statements is true? a. The risk premium associated with Stock Q, RPo, should be 1.6 times the risk premium associated with Stock P, RPp. b. The risk premium associated with Stock Q, RPo, should be two times the risk premium associated with Stock P. Rp.O c. The required rate of return for Stock Q, ro, should be 1.6 times the required rate of return for Stock P, rp. d. The required rate of return for Stock Q, ro, should be two times the required rate of return for Stock P, re.

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