-What would happen to the cost of equity if the expected inflation rose by 0.2% if the company had a beta of 1?

a)Increase by 0.2% b)Decrease by 0.2% c)Nothing - no change at all -The CAPM is one model that can be used to determine the cost of equity. If the market risk premium is 5%, the current 10 year Treasury Bond is 1.2% and the Company's Beta is 0.9 what would be the cost of equity?

a) 6.2 b) 5.7 c) 4.8 d) 5.6