(Require formula with step, financial calculator and excel are not accepted)

You have been asked by one of your corporate clients to evaluate the risk and return of two assets, A and B. The firm is considering adding these assets to its diversified asset portfolio. The average annual rate of return given below summarise the firm's analysis over the preceding 10 years, 2011-2020. (Require formula with step, financial calculator and excel are not accepted) Asset A Asset Bea Average annual 11.70% 11.04% rate of return You believe that the capital asset pricing model (CAPM) can be used to assess the asset's risk as part of the firm's portfolio of assets. Applying some sophisticated quantitative techniques, you estimated betas for assets A and B of 1.60 and 1.10, respectively. In addition, you find that the risk-free rate is currently 7% and that the market return is 10%. To Do: a. Use the CAPM to find the required return for each asset. (2 marks) b. Compare this value with the average annual returns. Which asset should be considered as a better choice? (2 marks) c. Use the CAPM to recalculate the required return for each asset under the following circumstances: (2 marks) e As a result of favourable political events, investors suddenly become less risk-averse, causing the market return to drop by 2%, to 8% (other variables keep constant). d. Compare this value with the average annual returns. Which asset should be considered as a better choice? (2 marks)+ e. In a broader sense risk can be categorised into two types: systematic risk and unsystematic risk. What is the difference between those two types of risks? (You're expected to write no more than 250 words in your answers.) (4 marks)