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Q3. (10 marks) KM Inc.'s beta is 1.5. Assume that the market is now in equilibrium. The required rate of return on the stock is

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Q3. (10 marks) KM Inc.'s beta is 1.5. Assume that the market is now in equilibrium. The required rate of return on the stock is 12%; a required rate of return on an average stock is 10.00%. Suppose now the required return on an average stock increases to 13%. There is no change on betas and the risk free rate. What's ABCXYZ Inc.'s new required rate of return

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