You are currently serving as a Consultant under the Research Division of a local investment company, KANAKA INVESTMENT CO. Your research activities cover risk-return analysis, portfolio management and offering professional advice on the investment options that offer sustainable returns. You have been performing extensive work on risk & return related issues and opportunities. Someone who is concerned about investment returns, but highly interested in dealing with investment that mainly involves financial markets (capital markets). This guy has no experience in investment dealings but decided to take risk and start investing. However, the guy has raised some important concerns with regard to his investment plan. They are as follows. How does concept of CAPM assist investors to create viable returns on their investment plans.

1. What are the difficulties faced by investors especially in adopting financial fundamentals in

2. meeting their investment goals. Are the risk-return fundamental still relevant?

As Consultant, you are required to address the above concerns with the intention of convincing the potential investor to invest with KANAKA.