company a has a beta of 0.70 while company b beta is 1.45. the required return...

Question

Question

company a has a beta of 0.70 while company b beta is 1.45. the required return on the stock market is 11.00%.

and the risk-free rate is 4.25%. what is the difference between A's and B's required rate of return?

business finance

Answer 1

Answer #1

difference between A and B's required return = difference in betas *(required return on stock market - risk free rate)

=> (1.45 - 0.70) *(11-4.25)

=>5.0625%.

Answer 2

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