Asset valuation model. In the plans of a CMN is the formation of a Model with active investments. In the market Rt = 8%. km = 12 and the beta coefficients of i^ prime prime A = 1.1, of - B ^ prime prime =1.20.

a. Plot the stock market lines on a set of axes that present the systematic risk and return required for "A" and "B." Use the MPAC model to calculate the required return on each asset. b. In the LMV, set up and value the slope for "A" and "B" and indicate which asset has the greatest systematic risk and which is a better investment. c. Suppose that, as a result of events, inflation expectations have decreased by 2%, 1 lowering Rf and km to 16% * and * 10% respectively. Redraw the LMV on the axes of part a) and calculate and show the new return required for sim A^ prime prime and^ prime prime B^ prime prime. From recent events, investors have.

d. Suppose that, as a consequence, increased risk aversion, causing the market return to rise to 13%. Ignoring the change in part c), draw the new LMV on the same axes as before, and calculate and show the new return required for both active.

Based on the previous changes: 1. What conclusions can be drawn about the effects on the decrease in Inflation expectations and rising risk aversion on yields required risky assets?

2. Point out why the capital asset valuation model was developed and what aspects the expected return on an asset depends on.

F. If the MNC finally decides to form a portfolio, with a combination of the two assets and invest 25% in "A" and the rest in "B", indicate the return and risk of the briefcase.