15. Problem 8.05 (Beta and Required Rate of Return) eBook A stock has a required return of 12%, the risk-free rate is 5.

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15 Problem 8 05 Beta And Required Rate Of Return Ebook A Stock Has A Required Return Of 12 The Risk Free Rate Is 5 1 (30.09 KiB) Viewed 36 times

15. Problem 8.05 (Beta and Required Rate of Return) eBook A stock has a required return of 12%, the risk-free rate is 5.5%, and the market risk premium is 5%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. 1. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium II. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium III. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium. IV. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium V. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium. Select B %. Stock's required rate of return will be Grade it Now Save & Continue Continue without saving