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Calculate the required rate of return for Clinics Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real
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Calculate the required rate of return for Clinics Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 1.00. (Hint: the risk free in the CAPM model is the nominal risk-free rate, not the real risk-free rate; thus, you have have find it first. And you have to understand the difference between Market Return and Market Risk Premium).
1. 10.29%
2. 10.83%
3. 11.40%
4. 12.00%
5. 12.60%
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