Question
Data for Dana Industries is shown below. Now Dana buys some risky assets that cause her beta to increase by 30.0%. In addition, expected inflation
Data for Dana Industries is shown below. Now Dana buys some risky assets that cause her beta to increase by 30.0%. In addition, expected inflation increases by 0.80%. What is the new required rate of return on the stock? Do not round your intermediate calculations.
| early beta | 1.00 |
| Initial required return (r s ) | 10.20% |
| Market risk premium, RPM M | 6.00% |
| Percent increase in beta | 30.00% |
| Increase in the inflation premium, IP | 0.80% |
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
