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    Calculate Beta and rate of return for a stock

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    A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premuim is 4%.

    A. What is the stock's beta?
    B. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged.

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    Solution Preview

    required rate or return = Rf + Beta (Rm-Rf)
    Rf= risk free rate
    Rm= market ...

    Solution Summary

    The solution calculates beta and rate of return for a stock.