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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 Summary

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

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

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