A stock with a beta of 11 has an expected rate of return of 16%. If...

Question

Question

Answer 1

Answer #1

since the market return reduced by 10 percentage points,

the rate of return on stock will reduce by (beta * reduction in market return) percentage points

=> (1.1 * 10 ) =>11 percentage points.

now,

new rate of return on stock = 16% - 11% =>5%.

Stock return

5.0%

Answer 2

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