Assume the betas for securities $A,B,$ and $C$ are as shown here: ${?}^1.$

a$.$ Calculate the change in return for each security if the market experiences an increase in its rate of return of $13\mathrm{.}8\%$ over the next period.

b$.$ Calculate the change in return for each security if the market experiences a decrease in its rate of return of $9\mathrm{.}9\%$ over the next period.

c$.$ Rank and discuss the relative risk of each security on the basis of your findings. Which security might perform best during an economic downturn? Explain.

a$.$ Calculate the change in return for each security if the market experiences an increase in its rate of return of $13\mathrm{.}8\%$ over the next period.

Security A$\text{'}$s change in return will be

$\%.($Round to two decimal places.$)$

Security B$\text{'}$s change in return will be

$\%.($Round to two decimal places.$)$

Security C$\text{'}$s change in return will be

$\%.($Round to two decimal places.$)$

b$.$ Calculate the change in return for each security if the market experiences a decrease in its rate of return of $9\mathrm{.}9\%$ over the next period.

Security A$\text{'}$s change in return will be

$\%.($Round to two decimal places.$)$

Security B$\text{'}$s change in return will be

$\%.($Round to two decimal places.$)$

Security C$\text{'}$s change in return will be

$|\%.($Round to two decimal places.$)$

c$.$ Rank and discuss the relative risk of each security on the basis of your findings. Which security might perform best during an economic downturn? Explain. $($Selec the best choice below.$)$

the market return.

B$.$ Security A is the most risky. It has the highest relevant risk, as determined by the beta values and the greater changes in security A$\text{'}$s return for a given change in the market return.

C$.$ Security $C$ could be called defensive since it moves in the opposite direction from the market $($its return increased when the market return fell and vice versa$).$

D$.$ Security $B$ is the least risky since its return is least responsive $($regardless of direction$)$ to changes in the market return.

E$.$ All the above statements are correct.

$1$: Data Table

$($Click on the icon here $$ in order to copy its contents of the data table below into a spreadsheet.$)$