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Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 25%. In addition, expected inflation

  1. Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 25%. In addition, expected inflation increases by 1.30%. What is the stock's new required rate of return?
    Initial beta
    1.00
    Initial required return (rs)
    10.20%
    Market risk premium, RPM
    6.00%
    Percentage increase in beta
    25.00%
    Increase in inflation premium, IP
    1.30%

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