Multiple Choice
You are holding a stock with a beta of 2.0 that is currently in equilibrium. The required rate of return on the stock is 15% versus a required return on an average stock of 10%. Now the required return on an average stock increases by 30.0% (not percentage points) . The risk-free rate is unchanged. By what percentage (not percentage points) would the required return on your stock increase as a result of this event?
A) 36.10%
B) 38.00%
C) 40.00%
D) 42.00%
E) 44.10%
Correct Answer:
Verified
Correct Answer:
Verified
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