Mikkelson Corporation's Stock Had a Required Return of 11

question 133

Multiple Choice

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.)

• A)14.38%
• B)14.74%
• C)15.11%
• D)15.49%
• E)15.87%

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Definitions:

Communication Plan

A strategic document that outlines an organization's approach to conveying information to its target audiences, including the tools, channels, and timelines for communication.

Frontline Managers

Supervisors or lower-level managers who are directly responsible for overseeing the work of rank-and-file employees.

Ongoing Process

A continuous, unending procedure or activity that often requires regular monitoring and updating.

Infrastructure

The basic physical and organizational structures and facilities needed for the operation of a society or enterprise, such as buildings, roads, and power supplies.