3 Suppose that investors perceive an increased risk element in the firm, as a result of the...
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3 Suppose that investors perceive an increased risk element in the firm, as a result of the new technology, which causes the firm’s beta to increase to 1.50. If the risk-free rate, Rf, and the market return; ERm, are to remain unchanged, and ignoring any increase in dividend returns, show how this increase in risk is likely to affect Carlson’s share value.
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