Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE):

r_RF = 4%; r_M = 8%; RP_M = 4%, and beta = 1.4

What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

%

If inflation increases by 1% 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 2%. 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 1% and risk aversion increases by 2%, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.