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8-5 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

8-5 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 stocks beta?

b.If the market risk premium increased to 5%, what would happen to the stocks required rate of return? Assume that the risk-free rate and the beta remain unchanged.

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