Yonan Corporation's Stock Had a Required Return of 11

question 7

Multiple Choice

Yonan Corporation's stock had a required return of 11.50% last year,when the risk-free rate was 5.50% and the market risk premium was 4.75%.Now suppose there is a shift in investor risk aversion,and the market risk premium increases by 2%.The risk-free rate and Yonan's beta remain unchanged.What is Yonan's new required return? (Hint: First calculate the beta,then find the required return.)

• A)14.03%
• B)14.38%
• C)14.74%
• D)15.10%

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Definitions:

Perception of Threat

The individual or collective interpretation of an event, situation, or entity as posing a potential danger or harm.

Out Groups

Social groups to which an individual does not belong or identify, often perceived as different or outside the norm.

Undifferentiated Attribution

The tendency to ascribe similar characteristics or motives to a group without recognizing individual differences within the group.

Stereotype

A widely held but fixed and oversimplified image or idea of a particular type of person or thing.