Stock R has a beta of 2.5, Stock S has a beta of 0.85, the required return on an average stock is 12%, and the risk-free rate of return is 4%. By how much does the required return on the riskier stock exceed the required return on the less risky stock

The difference between the riskier and less riskier stock is 13.2 percent.

Explanation:

Given that the stock R has the Beta = 2.5

The stock S has the beta  = 0.85

The required return on the average stock = 12%

Given risk free rate of return = 4%

Now calculate the required return by using the below formula:

Ke = Rf + B (Rm - Rf)

Rf = risk free rate of return

B = beta

Rm = market rate of return

Required return on riskier stock =

Required return on less risky stock =

Now the difference between the both risk = 24 % - 10.8% = 13.2%

if you do not file your taxes you will not have a job, and you credit rate will go down.