Define the capm and required return

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Reference no: EM131560300

CAPM and required return HR Industries (HRI) has a beta of 2.3, while LR Industries's (LRI) beta is 0.6. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. The expected rate of inflation built into r_RF falls by 1.5 percentage points; the real risk-free rate remains constant; the required return on the market falls to 10.5%; and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI? %

Reference no: EM131560300

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