Parson Plastic's stock has an estimated beta of 1.4, and its required rate of return is 13 percent. Podactor Motors' stock has a beta of 0.8. The risk-free rate is 6 percent. What is the required rate of return on Podactor Motors' stock?
A) 7.0%
B) 10.4%
C) 12.0%
D) 11.0%
E) 10.0%
Correct Answer:
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