Hr industries hri has a beta of 12 while lr industries lri


CAPM and required return

HR Industries (HRI) has a beta of 1.2, while LR Industries' (LRI) beta is 0.7. 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? Round your answer to two decimal places.

CAPM and portfolio return

You have been managing a $5 million portfolio that has a beta of 1.55 and a required rate of return of 12%. The current risk-free rate is 4.25%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.30, what will be the required return on your $5.5 million portfolio? Round your answer to two decimal places.

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Financial Management: Hr industries hri has a beta of 12 while lr industries lri
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