Question: What will happen to the expected return on a stock with a Beta of 1.5 and a market risk premium of 9% if the Treasury

What will happen to the expected return on a stock with a Beta of 1.5 and a market risk premium of 9% if the Treasury bill yield increases from 3% to 5%?

Multiple Choice

  • the expected return will increase by 1.0%

  • the expected return will increase by 3.0%

  • the expected return will remain unchanged

  • the expected return will increase by 2.0%

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