Stock A has a beta of 0, the risk-free rate is 4% and the return on...

Stock A has a beta of 0, the risk-free rate is 4% and the return on the market is 9%. If the market risk premium changes by 8%, by how much will the required return on Stock A change?

Expert Solution

Beta = 0

rf = 4%

Market return = 4%

If the market risk premium changes by 8%, the required return on stock A

Because beta = 0

The required return on Stock A will not change if the market risk-premium changes by 8% because beta of the stock is 0

jeff jeffy answered 2 years ago

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