Question: Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): rRF = 5%; rM = 7%; RPM = 2%, and beta

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

rRF = 5%; rM = 7%; RPM = 2%, and beta = 1

A) What is WCE's required rate of return? Round your answer to 2 decimal places. Do not round intermediate calculations. %

B) If inflation increases by 1% 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. %

C) Assume now that there is no change in inflation, but risk aversion increases by 2%. What is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations. %

D) If inflation increases by 1% and risk aversion increases by 2%, what is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations. %

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