Increase in the market return be expected

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Answer the questions below for assets A to D shown in the table.

Asset Beta

A ...... 0.50

B ...... 1.60

C ...... 0.20

D ...... 0.90

a. What impact would a 10% increase in the market return be expected to have on each asset's return?

b. What impact would a 10% decrease in the market return be expected to have on each asset's return?

c. If you believed that the market return would increase in the near future, which asset would you prefer? Why?

d. If you believed that the market return would decrease in the near future, which asset would you prefer? Why?

Reference no: EM131107301

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