Porter Plumbing's stock had a required return of 11.00% 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? Select the correct answer. a. 13.32% b. 13.42% c. 13.52% d. 13.62% e. 13.72%
Porter Plumbing's stock had a required return of 11.00% 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? Select the correct answer. a. 13.32% b. 13.42% c. 13.52% d. 13.62% e. 13.72%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Porter Plumbing's stock had a required return of 11.00% 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
Select the correct answer.
a. 13.32%
b. 13.42%
c. 13.52%
d. 13.62%
e. 13.72%
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