Question: Problem 3 (Beta and Required Rate of Return) A stock has a required return of 9%, the risk-free rate is 4.5%, and the market risk

Problem 3 (Beta and Required Rate of Return) A stock has

Problem 3 (Beta and Required Rate of Return) A stock has a required return of 9%, the risk-free rate is 4.5%, and the market risk premium is 3%. a. What is the stock's beta? b. If the market risk premium increased to 5%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged

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