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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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Mathematical Applications for the Management Life and Social Sciences
Authors: Ronald J. Harshbarger, James J. Reynolds
11th edition
978-1305108042
