Tag: LRI
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Assume that you receive another $500,000. If you invest the money in a stock with a beta of 0.75, what will be the required return on your $5.5 million portfolio?
CAPM and required return HR Industries (HRI) has a beta of 1.8, while LR Industries’ (LRI) beta is 0.6. The risk-free rate is 6 percent, and the required rate of return on an average stock is 13 percent. Now the expected rate of inflation built into rRF falls by 1.5 percentage points, the real risk-free…