Riskier stock exceed required return on less risky stock

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Reference no: EM131859893

1. John, an investment adviser, tells Lisa that if she's willing to invest the amount of $100 today, he can increase this investment by 5 times in 8 years. What annual rate of return is John promising on this investment?

2. Stock R has a beta of 1.5, Stock S has a beta of 0.65, the required return on an average stock is 12%, and the risk-free rate of return is 4%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.

Reference no: EM131859893

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