CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00%. Now the required return on an average stock increases by 40.0% (not percentage points). Neither betas nor the risk-free rate change. What would CCC's new required return be? Do not round your intermediate calculations. a. 13.50% b. 20.34% c. 20.70% d. 20.52% e. 18.00%

Essentials Of Investments
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Chapter1: Investments: Background And Issues
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CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00%. Now the required return on an average
stock increases by 40.0% (not percentage points). Neither betas nor the risk-free rate change. What would CCC's new required return be? Do not round your intermediate calculations.
Ⓒa. 13.50%
Ob. 20.34%
c. 20.70%
d. 20.52%
e. 18.00%
Transcribed Image Text:CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00%. Now the required return on an average stock increases by 40.0% (not percentage points). Neither betas nor the risk-free rate change. What would CCC's new required return be? Do not round your intermediate calculations. Ⓒa. 13.50% Ob. 20.34% c. 20.70% d. 20.52% e. 18.00%
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