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What the difference in the required returns for hri and lri

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Question 1: HR Industries (HRI) has a beta of 1.1; 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 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?

Reference no: EM132496504

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