Required returns on zulu and guru stocks

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Zulu Corporation has a beta of 2.0, while Guru Corporation's beta is 0.5. The risk-free rate is 10 percent, and the required rate of return on an average stock is 15 percent. Now the expected rate of inflation built into rf falls by 3 percentage points, while other components of the risk-free rate remain constant, the required return on the market falls to 11 percent, and the betas remain constant. When all of these changes are made, what will be the difference in the required returns on Zulu's and Guru's stocks?

Reference no: EM132460016

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