Question: Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): r RF = 4%; r M = 7%; RP M =

Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE):

r_RF = 4%; r_M = 7%; RP_M = 3%, and beta = 1.1

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

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

Please sow calculations :)

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