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Which is closest to the expected return of the stock

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Question - Global Pistons (GP) has common stock with a market value of $600 million and debt with a value of $400 million. Investors expect a 15% return on the stock and a 5% return on the debt (Assume perfect capital markets). Suppose GP issues $400 million of new stock to buy back the debt. Which is closest to the expected return of the stock after this transaction?

Reference no: EM132868704

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