Company A has a beta of 0.60, while Company B's beta is 1.70. The required return on the stock market is 9.00%, and the risk-free rate is 2.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Do not round your intermediate calculations. a. 10.013% b. 9.900% ○ c. 6.300% ○ d. 7.425% ○ e. 4.950%
Company A has a beta of 0.60, while Company B's beta is 1.70. The required return on the stock market is 9.00%, and the risk-free rate is 2.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Do not round your intermediate calculations. a. 10.013% b. 9.900% ○ c. 6.300% ○ d. 7.425% ○ e. 4.950%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Company A has a beta of 0.60, while Company B's beta is 1.70. The required return on the stock market is 9.00%, and the risk-free rate is 2.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Do not round your intermediate
calculations.
a. 10.013%
b. 9.900%
○ c. 6.300%
○ d. 7.425%
○ e. 4.950%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fccb668bc-10a4-4aaf-a388-7b2b8ddb3a25%2Fa779b45c-ac83-4ba6-94ea-77973999d4c4%2Fyvxx4v_processed.png&w=3840&q=75)
Transcribed Image Text:Company A has a beta of 0.60, while Company B's beta is 1.70. The required return on the stock market is 9.00%, and the risk-free rate is 2.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Do not round your intermediate
calculations.
a. 10.013%
b. 9.900%
○ c. 6.300%
○ d. 7.425%
○ e. 4.950%
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