# Currently under consideration is a project with a beta of 1.50

###### Question:

Currently under consideration is a project with a beta of 1.50. At this time, the risk free rate of return is 7% and the return on the market portfolio of assets is 10%.The project is actually expected to earn an annual rate of return of 11%.
a. If the return on the market portfolio were to increase by 10%, what would be the expected to happen to the project’s required return? What if the market return were to decline by 10%?
b. Use the CAPM to find the required return on this investment.
c. On the basis of your calculations in b, would you recommend this investment? Why or why not?
d. Assume that as a result of investors becoming less risk – averse, the market return drops by 1% to 9%.what impact would this change have on your response in b and c?

#### Similar Solved Questions

##### I need help for this problem ! I have no time plz help me ~ It's from introduction to categorical data analysis chapter 5, exercise 9 5.9 Problem 4.1 with Table 4.8 used a labeling index (LI) to p...
I need help for this problem ! I have no time plz help me ~ It's from introduction to categorical data analysis chapter 5, exercise 9 5.9 Problem 4.1 with Table 4.8 used a labeling index (LI) to predict r -the probability of remission in cancer patients. a. When the data for the 27 subjects are ...
##### Use the Roll Verification Data 1) Create a Histogram for the Height data. Convert to feet...
Use the Roll Verification Data 1) Create a Histogram for the Height data. Convert to feet only to do this.ex 5 feet 3inches is 5+3/12=5.25 2) Calculate the mean, median, standard deviation A Hypothesis test 3) Jed raises chickens. He says that the average chicken weight is 5.5 lbs. Test his claim. A...
##### Ln(k) = -E_a/R 1/T + ln(A) A plot of ln (k)versus 1/T result in a straight...
ln(k) = -E_a/R 1/T + ln(A) A plot of ln (k)versus 1/T result in a straight line with a slope = -E_a/R. The value of E_a can then be calculated using the value of R and to the slope of the line. This experiment uses the Arrhenius equation, which relates the temperature and specific reaction rate cons...
##### How do you simplify (5 + 2i ) - ( 2 + 3i )?
How do you simplify (5 + 2i ) - ( 2 + 3i )?...
##### Number1,2,3and 4 (8 points) Table 1: pH of Household Substances using Litmus Paper and Natural Indicators...
Number1,2,3and 4 (8 points) Table 1: pH of Household Substances using Litmus Paper and Natural Indicators PH Determined Using pH paper Color Change using Cabbage Juice Indicator Substance Baking Soda light bu s Vinegar 1light pin Carbonated Water 4 Bleach s Lemon Juice super grt e Pink oreer gh...
##### What is the role of naturally maintaining contingencies in generalization? How can we capitalize on this?
What is the role of naturally maintaining contingencies in generalization? How can we capitalize on this?...
##### 10*g of carbon disulfide is combusted with 15.5*L of oxygen gas, which is the reagent in excess?
10*g of carbon disulfide is combusted with 15.5*L of oxygen gas, which is the reagent in excess?...