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Porter Plumbing'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.)
Favorability
The degree to which something is perceived positively or benefits someone.
Dispute
A disagreement, argument, or debate, particularly one that is prolonged or legal in nature.
Neighbor
An individual who lives near or next to another; in broader terms, a person who is part of one's immediate geographical community.
Temporal Discounting
The inclination to prioritize short-term gratification over long-term benefits.
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