DHF Company Has a Beta of 1

question 1

Multiple Choice

DHF 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:

Attitude

A psychological construct that represents an individual's degree of like or dislike, positive or negative views, towards a person, object, or idea.

Evidence

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Jungian Theory

A psychological concept based on the ideas of Carl Jung, focusing on the importance of personal and collective unconscious, archetypes, and the process of individuation.

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