Question
Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 35%. In addition, expected inflation
Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 35%. In addition, expected inflation increases by 2.40%. 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 | 35.00% |
| Increase in inflation premium, IP | 2.40% |
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Short Term Financial Management
Authors: John Zietlow, Matthew Hill, Terry Maness
5th Edition
1516512405, 9781516512409
