Question

Assume the betas for securities A, B, and C are as shown here.
Security Beta
A .......... 1.4
B .......... 0.8
C .......... -0.9
a. Calculate the change in return for each security if the market experiences an increase in its rate of return of 13.2% over the next period.
b. Calculate the change in return for each security if the market experiences a decrease in its rate of return of 10.8% over the next period.
c. Rank and discuss the relative risk of each security on the basis of your findings. Which security might perform best during an economic downturn? Explain.


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  • CreatedApril 28, 2015
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