The risk-free rate is currently 3%, and the market return is 10%. Assume you are considering the following investments.

Investment Beta

A 1.5

B 1.0

C 0.75

D 0.0

E 2.0

Required:

a.Which investment is most risky and least risky?

b.Use the capital asset pricing model to find the required return on each of the investments

c.Based on your findings in part b, explain the relationship exists between risk and return.