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A firm with a beta of 2.0 should ______. a. be forced to stop trading until...

A firm with a beta of 2.0 should ______.

a. be forced to stop trading until the market perceives less risk

b. require twice the return on the market portfolio

c. require twice the market risk premium

d. require twice the risk-free rate of return

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Answer #1

As per CAPM Cost of Equity =Risk Free Rate+Beta*Market Risk Premium

A firm with a beta of 2.0 should required twice the market risk premium.
Option c is the correct option

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