Question 1
Stock R has a beta of 1.1, Stock S has a beta of 0.35, the expected rate of return on an average stock is 9%, 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.
Question 2
Bradford Manufacturing Company has a beta of 1.8, while Farley Industries has a beta of 0.8. The required return on an index fund that holds the entire stock market is 10.5%. The risk-free rate of interest is 7%. By how much does Bradford's required return exceed Farley's required return? Round your answer to two decimal places.