Reference no: EM132596123

Problem 1 - Using the Capital Asset Valuation Model (CAPM) equation, it determines the return required for the shares of the following companies, if the market yield is 7.50% (Rm x 7.50%) and the return of the risk-free asset is 1.25% (RF x 1.25%). You must show all the counts to receive a score. (15 points)

Active BETA

SKT 0.65

COST 0.90

You 1.42

AMZN 1.57

V 0.94

Problem 2 - If the yield of the risk-free asset is 2.25% (RRF x 2.25%) and the market yield is 6.50% (Rm x 6.50%),how much is the Beta of Bankof America, BAC, if youhave had a returnof 9.14%? You musts show all the counts to receive score.

Problem 3 - Consider a the assets of problem a 1 with their respective beta coefficients to answer the following questions:

a. Which of the assets represents the most sensitive to fluctuations or changes in market returns and why? What impact in terms of risk and return would this asset have if you add it to an investment portfolio in greater proportion than all other assets?

b. Which of the assets represents the least sensitive to fluctuations or changes in market returns and why? What impact in terms of risk and return would this asset have if you add it to an investment portfolio in greater proportion than all other assets?