Difference in the required returns for hri and lri

Assignment Help Financial Management

Reference no: EM131315185

HR Industries (HRI) has a beta of 1.8, while LR Industries' beta is 0.6. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. Now the expected rate of inflation built into rRF 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? Round your answer to two decimal places.

Reference no: EM131315185

Questions Cloud

Play in organizational change : How big of a role does fear actually play in organizational change? Can effective communication help to alleviate employees fear?

Accomplishment of organization action plans : What actions can senior leadership take to allocate organizational resources to support the accomplishment of the organization's action plans?

How far upstream does the flow from the source reach : In Problem, how far upstream does the flow from the source reach?- For the case of a source at the origin with a uniform free stream plot the streamline ψ = 0.

Exercise bicycles and mattresses : Adding to the complexity, U.S. consumers are also increasingly buying oversized items online, such as exercise bicycles and mattresses, which require manual handling because they cannot be fed onto conveyor belts in automated facilities along with..

Difference in the required returns for hri and lri : HR Industries (HRI) has a beta of 1.8, while LR Industries' beta is 0.6. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. Now the expected rate of inflation built into rRF falls by 1.5 percentage points, the real ..

Determining the lawfulness of the use of force : Specify the key points involved in the court determining the lawfulness of the use of force. Next, evaluate the level of objectivity inherent in each point that you have specified

Abstract expressionist artist : A description of the style of your Abstract Expressionist artist and why he or she was interested in this style of abstraction; was there a "meaning" to their work?

What is the embedded interest rate offered by the bank : A bank offers an investment opportunity, which requires you to invest 10,000 today and the bank promises to return 15,000 in 10 years. What is the embedded interest rate offered by the bank?

State whether or not the death penalty should be abolished : State whether or not the death penalty should be abolished and why. The letter should be 1 page in length, double spaced, and free of grammatical errors.

User Account

All Pages