Porter Plumbing's stock had a required return of 12.75% last year, when the risk-free rate was 5.50% and the market risk
Posted: Sun Jun 05, 2022 7:09 am
Porter Plumbing's stock had a required return of 12.75% 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? (Hint: First calculate the beta, then find the
required return.) Select the correct answer.
a. 15.80%
b. 16.10%
c. 16.40%
d. 16.70%
e. 17.00%
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? (Hint: First calculate the beta, then find the
required return.) Select the correct answer.
a. 15.80%
b. 16.10%
c. 16.40%
d. 16.70%
e. 17.00%