Beale Manufacturing Company has a beta of 1.5, and Foley Industries has a beta of 0.80....

  

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Beale Manufacturing Company has a beta of 1.5, and Foley Industries has a beta of 0.80. The required return on an index fund that holds the entire stock market is 14%. The risk-free rate of interest is 5.5%. By how much does Beale's required return exceed Foley's required return? Stock R has a beta of 2.0, Stock S has a beta of 0.45, the required return on an average stock is 12%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Beale Manufacturing Company has a beta of 1.5, and Foley Industries has a beta of 0.80. The required return on an index fund that holds the entire stock market is 14%. The risk-free rate of interest is 5.5%. By how much does Beale's required return exceed Foley's required return? Stock R has a beta of 2.0, Stock S has a beta of 0.45, the required return on an average stock is 12%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock?

Answer rating: 100% (QA)

To calculate the difference in required return between two stocks based on their betas we can use the Capital Asset Pricing Model CAPM The CAPM formul... View the full answer