# Difference in required rate of return

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%

https://brainmass.com/business/beta-and-required-return-of-a-project/difference-in-required-rate-of-return-307734

#### Solution Preview

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

Rate of ...

#### Solution Summary

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

$2.19