1. Beale Manufacturing Company has a beta of 1.5, and Foley Industries has a beta of 0.55. The required return on an index fund that holds the entire stock market is 11.5%. The risk-free rate of interest is 7%. By how much does Beale's required return exceed Foley's required return? Round your answer to two decimal places. %
2. You have been managing a $5 million portfolio that has a beta of 1.30 and a required rate of return of 15%. The current risk-free rate is 6.50%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 0.70, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places. %