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You are holding a stock that has a beta of 2.0 and is currently in equilibrium. The required return on the stock is 15 percent,
You are holding a stock that has a beta of 2.0 and is currently in equilibrium. The required return on the stock is 15 percent, and the market return is 10 percent. What would be the percentage change in the return on the stock, if the market return increased by 30 percent while the risk-free rate remained unchanged? and Why?
a. +20%
b. +30%
c. +40%
d. +50%
e. +60%
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