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HR Industries (HRI) has a beta of 1.5 while LR Industries (LRI) has a beta of 1.0. The risk-free rate is 4%, and the required
HR Industries (HRI) has a beta of 1.5 while LR Industries (LRI) has a beta of 1.0. The risk-free rate is 4%, and the required rate of return on an average stock is 12%. The expected rate of inflation built into Rrf falls by 2%, the real risk-free rate remains constant, the required return on the market falls to 9.5%, and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI?
options:
4.18% 4.65% 3.93% 3.48% 3.75%
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