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Difference in required rate of return

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1. Company A has a beta of 0.70, while Company B's beta is 0.80. 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 rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.)
0.57%
0.77%
0.68%
0.67%
0.80%

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Solution Summary

The solution explains how to calculate the difference in required rate of return for two stocks.

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Use the CAPM to calculate the rate of return on the two securities
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