Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): r RF =
Question:
Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE):
rRF = 2%; rM = 8%; RPM = 6%, and beta = 1.1
What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
%
If inflation increases by 3% but there is no change in investors' risk aversion, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.
%
Assume now that there is no change in inflation, but risk aversion increases by 1%. What is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.
%
If inflation increases by 3% and risk aversion increases by 1%, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.
%