Company a has a beta of 070 while company bs beta is 120, Ask an Expert

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Company A has a beta of 0.70, while Company B's beta is 1.20. 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.)

Answer

2.75%

2.89%

3.05%

3.21%

3.38%

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