Suppose the market return is 8 the risk-free rate is 1 and, Ask an Expert

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Suppose the market return is 8%, the risk-free rate is 1% and the beta for a given stock is 1.2. Answer the following questions based on this information:

A. What is the required return for this stock?

B. If the beta increases by 50% (but beta remains at 1.2), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above?

C. If the market return increases by 50% (but beta remains at 1.2), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92759541

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