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anuong05 anuong05
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10 months ago
If the price of money (e.g., interest rates and equity capital costs) increases due to an increase in anticipated inflation, the risk-free rate will also increase. If there is no change in investors’ risk aversion, the change in the risk-free rate will cause a change in the required market return, resulting in a relatively stable market risk premium (rM– rRF).However, if there is no change in stocks’ betas, then the required rate of return on each stock as measured by the CAPM will increase more than the increase in expected inflation.


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Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
Authors:
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michaelfidanzamichaelfidanza
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anuong05 Author
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10 months ago
I appreciate what you did here, answered it right Smiling Face with Open Mouth
Liarec
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Yesterday
Thanks for your help!!
Katey_maree
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2 hours ago
Good timing, thanks!
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