What is the stock new required return

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Reference no: EM131575427

Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 50%. In addition, expected inflation increases by 2.50%. What is the stock’s new required return?

–Initial beta 1.00

–Initial required return 10.20%

–Market risk premium 6.00%

–Percentage increase in beta 50%

–Increase in inflation premium 2.50%

(A) 15.70%

(B) 17.11%

(D) 12.25%

(E) 14.92%

Reference no: EM131575427

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