Given the following for Stocki: PO Bi rf 45.50 0.80 0.0300 E(M) 0.1200 News suddenly comes...

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Given the following for Stocki: PO Bi rf 45.50 0.80 0.0300 E(M) 0.1200 News suddenly comes out that increases the perceived risk of the stock to Bi= 1.3 You still expect the stock to be worth the price you calculated above, however, to what price should the stock drop reflecting the new expectation for risk? Given the following for Stocki: PO Bi rf 45.50 0.80 0.0300 E(M) 0.1200 News suddenly comes out that increases the perceived risk of the stock to Bi= 1.3 You still expect the stock to be worth the price you calculated above, however, to what price should the stock drop reflecting the new expectation for risk?

Answer rating: 100% (QA)

To determine the new price of the stock reflecting the increased risk we can use the following formu... View the full answer