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What is company new required rate of return for worth corp

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Reference no: EM132970448

CAPM: req. rate of return

Problem 1: Worth Corporation's stock had a required return of 8.30% last year when the risk-free rate was 2.45% and the market risk premium was 3.00%. Then an increase in investor risk aversion caused the market risk premium to rise by 1% from 3% to 4%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return?

a. 8.65%

b. 9.00%

c. 9.30%

d. 10.25%

e. 12.30%

 

Reference no: EM132970448

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