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Can you please check the four values, find Happy Corp's new required rate of returna and figure out the graph? Thanks so much! The following
Can you please check the four values, find Happy Corp's new required rate of returna and figure out the graph? Thanks so much!
The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows REQUIRED RATE 0F RETURN (Percent] 20.0 6.0 2.0 Return on HC's Stock 8,0 4.0 1.0 0.0 0.5 2.0 RISK (Beta CAPM Elements Value Risk-free rate (rRF) 4.0% Market risk premium (RPM) 7.8% Happy Corp. stock's beta 0.6 Required rate of return on 6.5% Happy Corp. stock An analyst believes that inflation is going to increase by 2.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return Then, on the graph, use the green points (rectangle symbols to plot the new S suggested by this analyst's prediction. Happy Corp.'s new required rate of return is Tool tip: Mouse over the points on the graph to see their coordinates. REQUIRED RATE OF RETURNIPer cent] 20 New SML 0.0 0.4 0.8 12 16 2.0 RISK [Beta Clear AlStep by Step Solution
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