Beta and required rate of return A stock has a required return of 11 percent; the risk-free
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Beta and required rate of return A stock has a required return of 11 percent; the risk-free rate is 7 percent; and the market risk premium is 4 percent.
a. What is the stock’s beta?
b. If the market risk premium increased to 6 percent, what would happen to the stock’s required rate of return? Assume the risk-free rate and the beta remains unchanged.
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E r pbeta Where E expected return r risk free rate p ri...View the full answer
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Related Book For
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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