Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 30%. In addition, expected inflation increases by 2.00%. What is the stock's new required rate of return? $$\begin{array} { l r r }
\text { Initial beta } & 1.00 & \
\text { Initial required return } \left( \mathrm { r } _ { \mathrm { s } } \right) & & 10.20 \% \
\text { Market risk premium, } \mathrm { RP } _ { \mathrm { M } } && 6.00 \% \
\text { Percentage increase in beta } && 30.00 \% \
\text { Increase in inflation premium, IP } & &2.00 \%
\end{array}$$
A) 14.00%
B) 14.70%
C) 15.44%
D) 16.21%
E) 17.02%

Question

Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 30%. In addition, expected inflation increases by 2.00%. What is the stock's new required rate of return? $$\begin{array} { l r r } 
\text { Initial beta } & 1.00 & \
\text { Initial required return } \left( \mathrm { r } _ { \mathrm { s } } \right) & & 10.20 \% \
\text { Market risk premium, } \mathrm { RP } _ { \mathrm { M } } && 6.00 \% \
\text { Percentage increase in beta } && 30.00 \% \
\text { Increase in inflation premium, IP } & &2.00 \%
\end{array}$$
A) 14.00%
B) 14.70%
C) 15.44%
D) 16.21%
E) 17.02%

Quizplus · Accepted Answer

The Answer of Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 30%. In addition, expected inflation increases by 2.00%. What is the stock's new required rate of return? $$\begin{array} { l r r } 
\text { Initial beta } & 1.00 & \
\text { Initial required return } \left( \mathrm { r } _ { \mathrm { s } } \right) & & 10.20 \% \
\text { Market risk premium, } \mathrm { RP } _ { \mathrm { M } } && 6.00 \% \
\text { Percentage increase in beta } && 30.00 \% \
\text { Increase in inflation premium, IP } & &2.00 \%
\end{array}$$
A) 14.00%
B) 14.70%
C) 15.44%
D) 16.21%
E) 17.02%

Data for Dana Industries Is Shown Below A) 1400% B) 14

Data for Dana Industries Is Shown Below A) 1400%
B) 14