Question

P&G's stock had a required return of 12.50% last year, when the risk-free rate was 3% 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.) Do not round your intermediate calculations. a. 12.87% b. 16.50% c. 13.04% d. 12.71% e. 14.36%

Please help! thank you

Answer #1

Porter Plumbing's stock had a required return of 10.25% 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?

Porter Plumbing's stock had a required return of 13.50% 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.)

A stock has a required
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What is the stock's beta?
Round your answer to two decimal places.
If the market risk premium
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return? Assume that the risk-free rate and the beta remain
unchanged. Do not round intermediate calculations. Round your
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If the stock's beta is
equal to 1.0,...

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