Answered: The market rate of return is 12.5% and…

The market rate of return is 12.5% and the risk-free rate is 3.5%. What will be the change in a stock's expected rate of return if its beta increases from 1.2 to 1.4? O188% 1.88% O1.80% 18.8% 25.0%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 2P: AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the...

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Question

The market rate of return is 12.5% and the risk-free
rate is 3.5%. What will be the change In a stock's
expected rate of return if its beta increases from 1.2
to 1.4?
1.88%
1.80%
O18.8%
O25.0%

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