Solved: Difference between kamath and gehr required rates of return, Finance Basics

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Difference between kamath and gehr required rates of return

Question:

Kamath Manufacturing Company has a beta of 1.45, while Gehr Industries has a beta of 0.85. The required return on the stock market is 12.00%, and the risk-free rate is 5.00%. What is the difference between Kamath's and Gehr's required rates of return? (Hint: first, find the market risk premium, then find required returns on the stocks.)

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Finance Basics: Difference between kamath and gehr required rates of return

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