CCC Corp Has a Beta of 1

question 136

Multiple Choice

CCC Corp 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 CCC's new required return be? Do not round your intermediate calculations.

• A) 16.34%
• B) 18.15%
• C) 14.19%
• D) 16.50%
• E) 14.69%

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