The risk-free rate of return is 6 percent, based on an expected inflation Premium of...
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Finance
The risk-free rate of return is 6 percent, based on an expected inflation Premium of 3 percent. The expected rate of return on the market portfolio is 15 percent.
(a ) Determine the required rate of return on your term Project company XYZ common stock whose beta is 0.60.
(b ) Assume that the expected rate of return on the Market Portfolio remains constant but that the expected inflation Premium increases from a current level of 3 percent to 4 percent. Determine the required rate of return on XYZ common stock.
(c ) Assume that the expected inflation premium remains at 3 percent but that the expected return on the Market Portfolio increases to 16 percent. Determine the required rate of return on XYZ common stock.
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