Investors aversion to risk increased

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1. Stock H has a beta of 1.8, while Stock L has a beta of 0.4. If investors’ aversion to risk increased...

a. the risk premium of Stock H would increase by more. b. the risk premium of Stock L would increase by more. c. the risk premiums of Stock H and L would remain unchanged. d. the risk premiums of Stock H and L would increase by the same amount.

2. Suppose rRF = 5.6%, rM = 9.8%, and bJ = 1.3. What is rJ, the required rate of return on Stock J?

a. 5.46% b. 12.74% c. 18.34% d. 11.06% e. 16.70%

Reference no: EM131886466

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