Discussion board:

Risk, Return, and the Capital Asset Pricing ModelAs a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the following in-formation pertaining to two common stock investments, Tech.com Incorporated and Sams Grocery Cor-poration. You are told that a one-year Treasury Bill will have a rate of return of 5% over the next year. Also, information from an investment advising service lists the current beta for Tech.com as 1.68 and for Sams Grocery as 0.52. You are provided a series of questions to guide your analysis.

Estimated Rate of Return

Economy Probability Tech.com Sams Grocery S&P 500

Recession 30% 20% 5% 4%

Average 20% 15% 6% 11%

Expansion 35% 30% 8% 17%

Boom 15% 50% 10% 27%

1. Which of these two-stock portfolios do you prefer? Why