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Author Question: Yonan Corporations stock had a required return of 12.8% last year, when the risk-free rate was 6.3% ... (Read 22 times)

kms5229

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Question 1

Which type of investor prefers lower returns with known risks rather than higher returns with unknown risks?

ordinary investor


risk-neutral investor


risk-seeking investor


risk-averse investor



Question 2

Yonan Corporation’s stock had a required return of 12.8% last year, when the risk-free rate was 6.3% and the market risk premium was 5.7%. Now suppose there is a shift in investor risk aversion, and the market risk premium increases by 3%. The risk-free rate and Yonan’s beta remain unchanged. What is Yonan’s new required return? (Hint: First calculate the beta, then find the required return.)

15.64%


15.80%


16.22%


16.58%



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Marked as best answer by kms5229 on Aug 7, 2023

Karla347

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kms5229

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review


covalentbond

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Reply 3 on: Yesterday
:D TYSM

 

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