required return=risk-free rate +Beta*(market rate- risk-free rate)
required return for:
Ford=1+(8-1)*1.5=11.5%
Tesla=1+(8-1)*0.4=3.8%
Hence difference=11.5%-3.8%
=7.7%
5. The stock of Ford has a beta of 1.5, and the stock o expected rate of return on the market is 8 percent, and h...
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