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Stock You Are Holding Has a Beta of 2

question 14

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stock you are holding has a beta of 2.0 and the stock is currently in equilibrium The required rate of return on the stock is 15% versus a required return on an average stock of 10% Now the required return on an average stock increases by 30.0% (not percentage points) The risk-free rate is unchanged By what percentage (not percentage points) would the required return on your stock increase as a result of this event?


Definitions:

National Saving

National saving, also known as domestic saving, is the sum of private and public saving, representing the part of national income that is not consumed or spent by the government.

Net Exports

The value of a country's total exports minus its total imports, reflecting the trade balance.

Net Capital Outflow

The difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners.

Foreign-Currency Exchange

The system through which one currency is converted into another, enabling international transactions without the impediment of differing national currencies.

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