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NMZ Ltd is currently considering an investment with a beta of 2 . At this time, the risk -free rate of return is 6% and

image text in transcribed NMZ Ltd is currently considering an investment with a beta of 2 . At this time, the risk -free rate of return is 6% and the return on the market portfolio of assets is 8%. NMZ Ltd believes that this investment will actually earn an annual rate of return of 10%. Required: a) Use the capital asset pricing model (CAPM) to find out the required return on this investment. b) On the basis of your calculation in part (a) above, would you recommend this investment? Why or why not

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