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Part 1 Investment with a beta, b, of 1.70. The risk-free rate of return, RF, is 8%, The return on the market portfolio of assets,
Part 1 Investment with a beta, b, of 1.70. The risk-free rate of return, RF, is 8%, The return on the market portfolio of assets, rm, is 12%. This investment will earn an annual rate of return of 13%. Requirement what would you expect to happen to the investment's return? a. If the return on the market portfolio were to increase by 9% b, if the market return were to decline by 9%? b. use capital asset pricing model (CAPM) is used to find c. the basis of your calculation in part b, would you d. Assume that as a result of investors becoming less risk the required return on this investment, discuss the result? recommend this investment? Why or why not? averse, the market return drops by 2% to 7%, what impact would this change have on your responses in parts band c
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