Question
XYZ stock had a required rate of return of 11.75% last year, when the risk free rate was 5.50% and the market risk premium was
XYZ stock had a required rate of return of 11.75% last year, when the risk free rate was 5.50% and the market risk premium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk free rate and the firm's beta remain unchanged. What is the company's new required rate of return?
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Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
