Problem 8-10 CAPM and required return Beale Manufacturing Company has a beta of 1.4, and Foley...

Question

Question

Problem 8-10 CAPM and required return Beale Manufacturing Company has a beta of 1.4, and Foley Industries has a beta of 0.95.

business finance

Answer 1

Answer #1

Required return=risk free rate+beta*(market rate-risk free rate)

Required return for:

Beale=5.75+(10-5.75)*1.4=11.7%

Foley=5.75+(10-5.75)*0.95=9.7875%

Hence difference=11.7-9.7875

=1.91%(Approx).

Add a comment

Answer 2

Similar Homework Help Questions

CAPM and required return Beale Manufacturing Company has a beta of 2.5, and Foley Industries has...

CAPM and required return Beale Manufacturing Company has a beta of 2.5, and Foley Industries has a beta of 0.3. The required return on an index fund that holds the entire stock market is 9%. The risk-free rate of interest is 3.75%. By how much does Beale's required return exceed Foley's required return? Round your answer to two decimal places.
Beale Manufacturing Company has a beta of 1.4, and Foley Industries has a beta of 0.5....

Beale Manufacturing Company has a beta of 1.4, and Foley Industries has a beta of 0.5. The required return on an index fund that holds the entire stock market is 8%. The risk-free rate of interest is 3%. 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.
Beale Manufacturing Company has a beta of 1.3, and Foley Industries has a beta of 0.4....

Beale Manufacturing Company has a beta of 1.3, and Foley Industries has a beta of 0.4. The required return on an index fund that holds the entire stock market is 13%. The risk-free rate of interest is 6.5%. By how much does Beale's required return exceed Foley's required return? Round your answer to two decimal places.

Beale Manufacturing Company has a beta of 1.1, and Foley Industries has a beta of 0.5....

Beale Manufacturing Company has a beta of 1.1, and Foley Industries has a beta of 0.5. The required return on an index fund that holds the entire stock market is 11%. The risk-free rate of interest is 7%. By how much does Beale's required return exceed Foley's required return? Round your answer to two decimal places.
Beale Manufacturing Company has a beta of 1, and Foley Industries has a beta of 0.7....

Beale Manufacturing Company has a beta of 1, and Foley Industries has a beta of 0.7. The required return on an index fund that holds the entire stock market is 11.5%. The risk-free rate of interest is 7%. By how much does Beale's required return exceed Foley's required return? Round your answer to two decimal places.
Beale Manufacturing Company has a beta of 1.7, and Foley Industries has a beta of 0.35....

Beale Manufacturing Company has a beta of 1.7, and Foley Industries has a beta of 0.35. The required return on an index fund that holds the entire stock market is 9.5%. The risk-free rate of interest is 5.5%. 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.

Beale Manufacturing Company has a beta of 1.2, and Foley Industries has a beta of 0.60....

Beale Manufacturing Company has a beta of 1.2, and Foley Industries has a beta of 0.60. The required return on an index fund that holds the entire stock market is 13%. The risk-free rate of interest is 5.5%. 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.
Beale Manufacturing Company has a beta of 1.1, and Foley Industries has a beta of 0.70....

Beale Manufacturing Company has a beta of 1.1, and Foley Industries has a beta of 0.70. The required return on an index fund that holds the entire stock market is 13%. The risk-free rate of interest is 3.5%. 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. %
8.9/8.10 Stock R has a beta of 2.5, Stock S has a beta of 0.55, the...

8.9/8.10 Stock R has a beta of 2.5, Stock S has a beta of 0.55, the required return on an average stock is 9%, and the risk-free rate of return is 4%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. Beale Manufacturing Company has a beta of 1.4, and Foley Industries has a beta of 0.70. The required return on an...

1:Stock R has a beta of 2.5, Stock S has a beta of 0.95, the required return on an average stock is 11%, and the risk-fr...

1:Stock R has a beta of 2.5, Stock S has a beta of 0.95, the required return on an average stock is 11%, 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? Round your answer to two decimal places. % 2:Beale Manufacturing Company has a beta of 2, and Foley Industries has a beta of 0.35. The required return on an...