Question
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?
| Beta: | 1.50 |
| Required return (rs) | 10.20% |
| RPM: | 6.00% |
| Percentage increase in beta: | 20% |
| a. | 17.02% | |
| b. | 14.00% | |
| c. | 14.70% | |
| d. | 16.21% | |
| e. | 15.44% |
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Finance And Strategy Inside China
Authors: Check-Teck Foo
1st Edition
9811328404,9811328412
