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Please help! a. Compare the market risk of a 1-year T-Bill, Project A, Project B, and equity in MSI. (Hint: Use the historical returns in

Please help!

a. Compare the market risk of a 1-year T-Bill, Project A, Project B, and equity in MSI. (Hint: Use the historical returns in Exhibit 13.2 to create a graph with market characteristic lines for a 1-year T-Bill, Project A, Project B, and equity in MSI.)

b. What would happen to the overall risk of a well-diversified portfolio with an investment in a 1-Year T-Bill? Project A? Project B? Equity in MSI?

c. What does the distance between the market characteristics line and the expected return of an investment indicate?

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1-Year S&P 500 Equity TBill Project A Project B Fund in MSI Year 1 7% -8% 18% 15% 0% Year 2 7% 2% 23% 0% 5% 14% Year 3 15% 7% 7% 10% Year 4 15% 3% 30% 7% 25% 20% 45% 2% Year 5 7% 33% Note: These return distributions are fictitious and not meant to describe actual market conditions at the time you work this case

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