Answer:
Given
Risk free rate Rf=2.5%
Market Rate Rm=7.2%
If Beta B=1.6
So required rate of return R= Rf+B*(Rm-Rf)
R=2.5%+1.6*(7.2%-2.5%)=10.02%
If Beta B=0.6
So required rate of return R= Rf+B*(Rm-Rf)
R=2.5%+0.6*(7.2%-2.5%)=5.32%
11. What is the required rate of return of this investment using the CAPM formula? a....
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