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What impact on the required rate of return for common stock

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Question - Polo, Inc. common stock has a beta equal The beta coefficient for the market. The expected return on the market is 14 percent, and the risk-free rate is 4 percent. The Polo common stock is actually expected to earn an annual rate of return of 10 percent. Assume that recent economic events have resulted in a decrease of 2% in inflationary expectations, what impact on the required rate of return for common stock?

a. 12.0%

b. 10.0%

c. 16.0%

d. 14.0%

Reference no: EM132996117

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