ABC's Compared to XYZ's Required Rates of Return
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ABC Manufacturing has a beta of 1.65, while XYZ Industries has a beta of 0.85. The required return on the stock market is 12.00% and the risk-free rate is 5.00%. What is the difference between ABC and XYZ's required rates of return?
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Solution Summary
This is a comparison of two company's required rates of return.
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Ke = Rf + b (Km - Rf)
Where:
Ke = Required rate of return ...
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- BE, Bangalore University, India
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