The negative news caused WACC to go up how much? Stock's beta 1.67 Market Risk Premium
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Question:
Stock's beta | 1.67 | ||||
Market Risk Premium | 4.1% | ||||
Current Yield To Maturity on Treasury Bonds | 3.1% | ||||
Percent of Target Capital Structure in Debt | 37% | ||||
Spread on debt as compared to Treasury Bonds | 2.1% | ||||
Tax rate | 40% | ||||
Negative news about the firm hits the market! | |||||
Result #1. The spread widens by this amount: | 4.2% | ||||
Result #2. The stock's beta has gone up this amount: | 0.40 | ||||
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