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You are an investment analyst working for a financial advisory firm. Your client is considering investing in a specific stock and has asked for your

image text in transcribed You are an investment analyst working for a financial advisory firm. Your client is considering investing in a specific stock and has asked for your recommendation based on the Capital Asset Pricing Model (CAPM). Your task is to perform a CAPM analysis using hypothetical numbers and provide an investment recommendation based on the results. Requirements: 1. Select a fictional company and gather the necessary data for the CAPM analysis: - Risk-free rate: Assume 2%. - Market return: Assume 10%. - Beta: Assume 1.2. 2. Calculate the expected return using the CAPM formula: Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). 3. Write a report explaining the CAPM analysis process and your findings: - Provide a brief overview of the CAPM and its components. - Present the data used in the analysis. - Show the calculations and formula used to determine the expected return. - Interpret the results and discuss the implications for the investment decision. 4. Based on the CAPM analysis, provide an investment recommendation for your client: - Explain whether the investment is expected to generate a return higher or lower than the risk-free rate. - Justify your recommendation using the CAPM results and any additional factors you consider relevant

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