A particular firms shareholders demand a 15% return on their investment, given the firms risk. However, this

Question:

A particular firm’s shareholders demand a 15% return on their investment, given the firm’s risk. However, this firm has historically generated returns in excess of shareholder expectations, with an average return on its of investments of 25%.
a. Looking back, what kind of stock-price performance would you expect to see for this firm?
b. A new investment opportunity arises, and the firm’s financial analysts estimate that the project’s return will be 18%. The CEO wants to reject the project because it would lower the firm’s average return and therefore lower the firm’s stock price. How do you respond?
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...