The market risk premium remains constant

Assignment Help Financial Management

Reference no: EM13728615

Stock A has a beta of 1.2 and a standard deviation of returns of 14%. Stock B has a beta of 1.8 and a standard deviation of returns of 18%. If the risk free rate of return increases and the market risk premium remains constant, then _________

a. The required rate of return on Stock B will increase more than the required rate of return on stock A.

b. The required returns on stocks A and B will both increase by the same amount.

c. The required returns on stocks A and B will remain the same

d. The required return on stock A will increase more than the required return on Stock B.

Reference no: EM13728615

Questions Cloud

Report should demonstrate skills of critical reflection : Viktoria has found out that freight to Zurich from Romania by courier would cost on average RON 150 per carton and that the total time from her placing an order to receiving the goods in Zurich would be two weeks

How the war began between britain and china : The Emperor's reaction to the opium smuggling. How the war began between Britain and China.

Explain the difference between ethics and the law : Explain the difference between ethics and the law

Diversity in the workplace : Critique one (1) global company with which you are familiar and determine three (3) inevitable conflicts that arise among individuals from different religions, racial, ethnic, and national groups who must work together. Provide a recommendation to..

The market risk premium remains constant : Stock A has a beta of 1.2 and a standard deviation of returns of 14%. Stock B has a beta of 1.8 and a standard deviation of returns of 18%. If the risk free rate of return increases and the market risk premium remains constant, then _________

Determine incentive pay : Propose two (2) methods an HR professional could use to determine incentive pay. Specify the principal manner in which the proposed methods take into consideration individual, group, and company performance. Justify your response.

Find an artwork from the medieval period : Go online and find an artwork from the Medieval Period. Then, choose one of the art history methodologies introduced in this week's module

Marketing and creative strategy plans : After the situation analysis and the development of both the marketing and creative strategy plans, it is time to develop the media plan

What is the weighted average cost of capital-tax bracket : A company plans a $14 million expansion. The expansion is to be financed by selling $6 million in new debt and $8 million in new common stock. The before-tax required rate of return on debt is 8% and the required rate of return is 16%. If the company..

User Account

All Pages