Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 2, Problem 12P

Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free rate is 7%. By how much does the required return on the riskier stock exceed that on the less risky stock?

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Stock R has a beta of 1.8, Stock S has a beta of 0.55, the expected rate of return on an average stock is 9%, and the risk-free rate is 3%. By how much does the required return on the riskier stock exceed that on the less risky stock?
The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27.  What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.
Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate ofreturn on an average stock is 13%, and the risk-free rate is 7%. By howmuch does the required return on the riskier stock exceed that on the lessrisky stock?
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