1) Stock Beta=(Required Rate-Risk Free Rate)/Market Risk Premium
=(9%-3.5%)3% =1.83
2)Option E is correct option If the stock's beta is greater than
1.0, then the change in required rate of return will be greater
than the change in the market risk premium.
Stock Required rate =Risk Free rate + Beta*Market risk Premium
=3.5%+1.8333*6% =14.50%
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