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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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