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Problem 4: (12 marks) A security analyst has forecasted returns on the market portfolio and shares of RIM under three different economic conditions for next year: Return on Return on State of the economy Probability Market RIM Boom 14 35% 55% Moderate Growth 11% 13% Recession 14 -6% -14% (a) Calculate the expected returns on the market portfolio. (2pts) (b) (c) Calculate the beta for RIM, assume the expected return for RIM is 16.75%. (6pts) Assuming the risk-free rate is 6%: (i) Calculate the market risk premium (Ipt) (ii) According to the CAPM, what is the required return for RIM? Compare this to the expected return of RIM (expected return is 16.75%). What is the implication of your finding? (3pts)