Computer company new required rate of return


Problem 1:

Calculate the standard deviation of the expected dollar returns for Computer Company Inc., given the following distribution of returns:

Probability    Return
0.2                $50
0.5                $20
0.3               -$15

Problem 2:

Computer Company Inc. has a beta coefficient of 0.7 and a required rate of return of 15 percent. The market risk premium is currently 5 percent. If the inflation premium increases by 2 percentage points, and Computer Company Inc. acquires new assets which increase its beta by 50 percent, what will be Computer Company's new required rate of return?

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