Question
The risk of stock ABC has been evaluated at = 1.4. Suppose the rate of return on three month T-bill is 5%. Suppose also that
The risk of stock ABC has been evaluated at = 1.4. Suppose the rate of return on three month T-bill is 5%. Suppose also that the market risk premium is 10%. The stock is fairly priced.
If there is a market crash, and the market risk premium triples, all else equal, how will the stock price change?
Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321.
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
