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9.20 The bets of Honda Motors stock is 1.5. The... firm's CEO is considering whether to purchase Toy- Land, a toy manufacturer whose beca is
9.20 The bets of Honda Motors stock is 1.5. The... firm's CEO is considering whether to purchase Toy- Land, a toy manufacturer whose beca is 0.8. Toyland one-fourth the size of Honda. At a stockholder- meeting, some investors raise objections to the purchase of Toyland, claiming that it will decrease Honda's mean rate of return and, therefore, "We will all be worse off." Assume the CAPM holds and the market is in equilibrium. Do you agree with the claim that after the pur- chase the mean rate of return will fall
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