Problem 1. Risk & Return and the CAPM.
Based on the following information, calculate the required return based on the CAPM:
Risk Free Rate = 3.5%
Market Return =10%
Beta = 1.08
Problem 2. Risk and Return, Coefficient of Variation
Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship.
Std Dev. Exp. Return
Company A 10.4 15.2
Company B 14.6 22.9
Problem 3. Risk and Return, Coefficient of Variation
Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship.
Std Dev. Exp. Return
Company A 7.4 13.2
Company B 11.6 18.9
Problem 4. Portfolio Theory Risk.
What is portfolio theory and why is it important to investing behavior? 250 words
Problem 5. Sources of Risk.
Identify sources of risk and contrast them (include examples) and explain why investors should be concerned with them 250 words