Kamath Manufacturing Company has a beta of 1.45, while Gehr 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 Kamath's and Gehr's required rates of return? (Hint: first, find the market risk premium, then find required returns on the stocks.)© BrainMass Inc. brainmass.com June 3, 2020, 9:11 pm ad1c9bdddf
Brief calculations show how to find the difference in required rates of return when given two companies' betas.