Question
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
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 rick-free rate and the beta remain unchanged.
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Introduction to Finance Markets, Investments and Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
16th edition
1119398282, 978-1-119-3211, 1119321115, 978-1119398288
