Quantitative problem-change in inflation

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Reference no: EM131506489

Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): rRF = 2%; rM = 10%; RPM = 8%, and beta = 1.3

a) If inflation increases by 3% but there is no change in investors' risk aversion, what is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations

b) Assume now that there is no change in inflation, but risk aversion increases by 1%. What is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations.

c) If inflation increases by 3% and risk aversion increases by 1%, what is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations.

Reference no: EM131506489

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