What will determine the new rk to be

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Reference no: EM13300599

Yesterday Susan determined that the risk-free rate of return rRF, is 3 percent, the required return on the market portfolio, rM, is 10 percent, and the required rate of return on Stock K, rK, is 17 percent. Today Susan received new informstion that indicates investors are more risk averse than she thought, such that the market risk premium, RPm, actually is 1 percent higher than she estimated yesterday. When Susan considers the effect of this change in risk premium, what will determine the new rK to be?

Reference no: EM13300599

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