1. XIA Manufacturing Berhad must consider several investment projects, A through E, using the capital asset pricing model (CAPM). In addition, the firm is considering building a portfolio and the investment amount is equally distributed among the projects. Relevant information is presented in the following table. Rate of return Beta, b 0 9% 14 1.00 1.50 Item Risk free asset Market portfolio Project A Project B Project C Project D Project E 0.75 2.00 0 0.5 Calculate the required rate of return and the risk premium for each project given its level of systematic risk. (b) Discuss the relative systematic risk of projects A through E. Relate your discussion with the beta value and required of return. Assume that recent economic events have caused investors to become less risk- averse, causing the market return to decline by 2%, to 12%. Calculate the new required returns for assets A through E. (d) Based on your findings in part (2) and (c), what conclusion can you draw about the impact of a decline in investor risk aversion on the required returns of risky assets? If rate of market return decrease, required rate of return will also decrease. (e) Calculate the expected return and beta of your portfolio. () Explain the benefit of diversification achieved through creation of this portfolio