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HR Industries ( HRI ) has a beta of 2 . 2 , while LR Industries' ( LRI ) beta is 1 . 6 0

HR Industries (HRI) has a beta of 2.2, while LR Industries' (LRI) beta is 1.60. The riskfree rate is 3%, and the required rate of return on an average stock is 10%. The expected rate of inflation built into rRF falls by 1.0 percentage points, the real risk-free rate remains constant, the required return on the market falls to 9.0%, and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI, that is,rHRI-rLRI.
4.20%
3.78%
4.62%
3.99%
4.41%
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