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Hocking Manufacturing Company Has a Beta of 0

question 99

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Hocking Manufacturing Company has a beta of 0.65,while Levine Industries has a beta of 1.40.The required return on the stock market is 11.00%,and the risk-free rate is 4.25%.What is the difference between Hocking's and Levine's required rates of return? (Hint: First find the market risk premium,then find the required returns on the stocks.)


Definitions:

Malthus's Theory

A principle positing that population growth tends to outpace agricultural production, leading to scarcity, famine, and social strife.

Arithmetically

Pertaining to arithmetic, the branch of mathematics dealing with the properties and manipulation of numbers.

Geometrically

In a manner that relates to geometry, the branch of mathematics concerned with the properties and relations of points, lines, surfaces, and solids.

Concentric Zone Model

A theory in urban sociology that suggests cities grow in a series of rings emanating from the downtown area.

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