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problem: 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 percent. Estimate the difference between Kamath's and Gehr's required rates of return? [Clue: First, find out the market risk premium, then find required returns on the stocks.]

[A] 3.60%

[B] 4.20%

[C] 3.90%

[D] 3.75%

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M916189

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