Ch $08-$ End$-$of$-$Chapter Problems $-$ Risk and Rates of Return

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Problem $8\mathrm{.}10($CAPM and Required Return$)$

Beale Manufacturing Company has a beta of $1\mathrm{.}6,$ and Foley Industries has a beta of $0\mathrm{.}50.$ The required return on an index fund that holds the entire stock market

is $14\%.$ The risk$-$free rate of interest is $5\mathrm{.}5\%.$ By how much does Beale's required return exceed Foley's required return? Do not round intermediate calculations.

Round your answer to two decimal places.

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