Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 2, Problem 7P

a)

Summary Introduction

To compute: The beta for stock A.

b)

Summary Introduction

To compute: The new required rate of return for stock A when the beta of stock A is 2.0.

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Suppose risk-free rate of return = 2%, market return = 7%, and Stock B’s return = 11%.     a. Calculate Stock B’s beta.     b. If Stock B’s beta were 0.80, what would be its new rate of return?
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