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8-5 Beta and Required Rate of Return A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium

8-5 Beta and Required Rate of Return A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium is 4%.

a. What is the stock's beta?

b. If the market risk premium increased to 6%, 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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