Assume the betas for securities A, B, and C are as shown here.

SecurityBeta

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.