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Consider the information below for Postman Builders Inc. Suppose that the expected inflation rate and thus the inflation premium increase by 2.0 percentage points, and
Consider the information below for Postman Builders Inc. Suppose that the expected inflation rate and thus the inflation premium increase by 2.0 percentage points, and Postman acquires risky assets that increase its beta by the indicated percentage. What is the firm's new required rate of return? Select the correct answer. a. 14.85% b. 14.90% c. 14.95% d. 14.75% e. 14.80% Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate, and the required return on the United Fund are shown below. Based on this information, what is the required return on the market, rM ? r RF: 7.00%; runited: 95.00% Select the correct answer. a. 65.85% b. 65.67% c. 65.61% d. 65.79% e. 65.73%
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