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    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 Preview

    Ke = Rf + b (Km - Rf)

    Ke = Required rate of return ...

    Solution Summary

    This is a comparison of two company's required rates of return.