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Mikkelson Corporation's stock had a required return of 11.75% 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? (Hint: First calculate the beta,then find the required return.)
Libertarianism
The political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income.
Income Redistribution
The reallocation of income across a society through taxation, monetary policies, and welfare systems.
Total Utility
The total satisfaction received from consuming a particular quantity of a good or service.
Incentives
Rewards or penalties that influence the motivation and behaviors of individuals and organizations towards certain actions.
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