You are evaluating two companies to determine which is a better return based on the risk for you. The first Company Corp USA has return of 12.5%, a beta of 2.2 and 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%.

7. You are evaluating two companies to determine which is a better return based on the risk for you. The first Company Corp USA has return of 12.5%, a beta of 2.2 and 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%.

Complete AND briefly discuss the following:

a. Each of the companies have a CV of how much?

b. Which company is riskier for your portfolio and why?

c. What is the required return of each company? What does this mean?

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

e. Briefly discuss the concept of risk and return in finance as it applies to a corporation. Provide an example.