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Stock R's beta = 1.5 Stock S's beta = 0.75 Consider that the required return on an average stock is 14 percent. The risk-free rate
| Stock R's beta = | 1.5 | ||||
| Stock S's beta = | 0.75 | ||||
| Consider that the required return on an average stock is 14 percent. The risk-free rate of return is 6 percent. If this is so, the required return on the riskier stock exceeds the required return on the less risky stock by how much? | |||||
| = 6% + 1.5*(14-6) | 12.06 | ||||
| = 6% + 0.75*(14-6) | 6.06 | ||||
| Diff. in required return(s) | 6.00 | ||||
| Is this correct? |
| ||||
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