Question

**Problem 8-5**

Beta and required rate of return

A stock has a required return of 11%; the risk-free rate is 6.5%; and the market risk premium is 4%.

What is the stock's beta? Round your answer to two decimal
places.

If the market risk premium increased to 9%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged.

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.

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.

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.

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.

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.

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New stock's required rate of return will be %. Round
your answer to two decimal places.

Answer #1

BETA AND REQUIRED RATE OF RETURN
a. A stock has a required return of 11%; the risk-free rate is
5%; and the market risk premium is 5%. What is the stock's beta?
Round your answer to two decimal places.
b. If the market risk premium increased to 10%, what would
happen to the stock's required rate of return? Assume that the
risk-free rate and the beta remain unchanged.
If the stock's beta is less than 1.0, then the change in...

BETA AND REQUIRED RATE OF RETURN
A stock has a required return of 12%; the risk-free rate is 7%;
and the market risk premium is 3%.
What is the stock's beta? Round your answer to two decimal
places.
If the market risk premium increased to 7%, what would happen
to the stock's required rate of return? Assume that the risk-free
rate and the beta remain unchanged.
If the stock's beta is equal to 1.0, then the change in
required rate...

A stock has a required return of 11%, the risk-free rate is
4.5%, and the market risk premium is 4%.
What is the stock's beta? Round your answer to two decimal
places.
If the market risk premium increased to 7%, 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.
If the stock's beta is greater than 1.0,...

A stock has a required return of 16%, the risk-free rate is
6.5%, and the market risk premium is 5%.
What is the stock's beta? Round your answer to two decimal
places.
If the market risk premium increased to 7%, 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.
If the stock's beta is greater than 1.0,...

A stock has a required return of 14%, the risk-free rate is
7.5%, and the market risk premium is 3%.
What is the stock's beta? Round your answer to two decimal
places.
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.
If the stock's beta is less than 1.0,...

A stock has a required return of 16%, the risk-free rate is
5.5%, and the market risk premium is 3%.
What is the stock's beta? Round your answer to two decimal
places.
If the market risk premium increased to 7%, 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.
If the stock's beta is greater than 1.0,...

A stock has a required return of 16%, the risk-free rate is 5%,
and the market risk premium is 3%.
What is the stock's beta? Round your answer to two decimal
places.
If the market risk premium increased to 10%, 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.
If the stock's beta is greater than 1.0,...

A stock has a required return of 13%; the risk-free rate is
3.5%; and the market risk premium is 6%. What is the stock's beta?
Round your answer to two decimal places.
If the market risk premium increased to 9%, what would happen to
the stock's required rate of return? Assume that the risk-free rate
and the beta remain unchanged.
If the stock's beta is greater than 1.0, then the change in
required rate of return will be less than...

A stock has a required return of 12%; the risk-free rate is 4%;
and the market risk premium is 4%. What is the stock's beta? Round
your answer to two decimal places. If the market risk premium
increased to 8%, what would happen to the stock's required rate of
return? Assume that the risk-free rate and the beta remain
unchanged. If the stock's beta is less than 1.0, then the change in
required rate of return will be greater than...

A stock has a required return of 10%, the risk-free rate is
2.5%, and the market risk premium is 4%.
a) What is the stock's beta? Round your answer to two decimal
places.
b) If the market risk premium increased to 8%, 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.
If the stock's beta is equal...

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