15 The market price of a security is $ 28.00 16 Its expected rate of return (Eri) is 16.00% 17 The risk free rate of return (rf) is 6.00% 18 The Current Market Risk Premium (Erm -rf) is 8.00% 19 The stock is expected to pay a CONSTANT dividend into perpetuity. 20 The correlation coefficient wrt market portfolio doubles. 2 21 Note: When the CORR doubles, the beta, and risk premium will also double. 22 There are 4 questions related to this data. 23 All percentages and dollar amounts should be taken out to 2 places. What will be the new market price of a security where the CORR doubles? New Market Price of Stock (Po) = relevant annual dividend / new discount rate = D/Eri a. New Market Price when CORR doubles = $26.36 b. New Market Price when CORR doubles = $36.20 C. New Market Price when CORR doubles = $20.36 d. New Market Price when CORR doubles = $30.36