Problem:
A stock you are holding has a beta of 2.0 and the stock is currently in equilibrium. The required rate of return on the stock is 15% versus a required return on an average stock of 10%. Now the required return on an average stock increases by 30.0% (not percentage points). The risk-free rate is unchanged.
Required:
Question: By what percentage (not percentage points) would the required return on your stock increase as a result of this event? Show your all work and explain in detail.