You are evaluating two companies to determine which is a better return based on the risk for you. The first Company Corp USA has a return of 12.5%, a beta of 2.2, and a variation of 47% of your expected return. Corporation Global Inc has a return of 9.75%, a beta of 1.4, and a variation of 33%. The guaranteed rate on your investment is 5.5% along with a market risk premium of 4%.

e. Lets say you decide to invest $55,000Global Inc and $80,000 in Corp USA Calculate the return on these two companies.

f. Which one of these companies would you prefer if the market premium is 7.5% and why?

g. Briefly discuss the concept of risk and return in finance.