Williams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%. The expected rate of inflation falls by 1%, the real risk-free rate remains constant, the required return on the market falls to 10%, and all betas remain constant. After all these changes what will be the difference in the required return for Williams and Hemberg.

Williams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%.…

Continue ReadingWilliams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%. The expected rate of inflation falls by 1%, the real risk-free rate remains constant, the required return on the market falls to 10%, and all betas remain constant. After all these changes what will be the difference in the required return for Williams and Hemberg.