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

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