Is it reasonable to hold all other factors constant

Reference no: EM13294447

Suppose that a 1 percent increase in expected inflation causes a 1 percent increase in the risk-free rate. Holding all other factors constant, what will this do to the firm's cost of equity? Is it reasonable to hold all other factors constant? What other part of the calculation of the cost of equity is likely to change if expected inflation rises?

Reference no: EM13294447

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