Question
Data for Hughs Corporation is provided below. Hughs recently acquired some risky assets that caused its beta to increase by 30%. What is the stock's
Data for Hughs Corporation is provided below. Hughs recently acquired some risky assets that caused its beta to increase by 30%. What is the stock's new expected rate of return according to the CAPM?
| Initial beta | 1.00 |
| Initial expected return (rs) | 10.20% |
| Market risk premium, E(Rm Rrf) | 6.00% |
| Percentage increase in beta | 30.00% |
| Increase in inflation premium | 2.00% |
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, George Foster, Srikant M. Datar, Howard D. Teall, Foster Horngren, Data Horngren
3rd Canadian Edition
0130355801, 978-0130355805
