CCC Corp Has a Beta of 1

question 22

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?

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

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Definitions:

Incentives

A reward or encouragement aimed at motivating certain behaviors or actions.

Motivation Theorists

Individuals who study and theorize about what motivates people to act in certain ways and how those motivations influence behavior.

Dopamine

A neurotransmitter involved in many functions, including mood, sleep, motivation, and reward.

Endorphin

biochemicals produced in the brain that act as natural painkillers and mood elevators, often released during exercise, excitement, and pain.