Company Has a Beta of 1

question 48

Multiple Choice

Company has a beta of 1.5 and is currently in equilibrium The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00% Now the required return on an average stock increases by 30.0% (not percentage points) Neither betas nor the risk-free rate change What would DHF's new required return be?

• A) 14.89%
• B) 15.68%
• C) 16.50%
• D) 17.33%
• E) 18.19%

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Definitions:

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A group of individuals forming a population with shared cultural heritage or ancestry.

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A prediction or expectation about a situation or behavior that leads individuals to act in ways that make the prediction come true.

Aboriginal Employee

A worker identified as being native or original to a particular region, often reflecting specific hiring considerations or policies.