1. Required rate of return Suppose that risk-free rate is 6% and the expected return on market is 13%. Find out the required rate of return on stock with beta of 0.7?
2. Beta and required rate of return A stock has required return of 11%; the risk-free rate is 7%; and the market risk premium is 4%.
a. Find out the stock's beta?
b. Is the market risk premium raised to 6%, what would happen to stock's required rate of return?
Suppose the risk-free rate and beta remain unchanged