$(10$ pts$)1.$ Explain the significance of the required rate of return and the expected rate of return. In your discussion, make sure to explain the relationship between the two, as well as how they can be determined.

Required rate of return or RRR is the return necessary in order.for investment to be worthwhile. The minimum return in investor to earn an investment to justify its risk. It's a benchmark to evaluate if an investment is worth pursuing is influenced by opportunity cost, risk level, and inflation.

Expected rate of return or EER is the return we believe in investment will generate. The anticipated return on investment from its potential outcomes and associated probabilities. It's the average return and investor expects to achieve.

ERR $>$ RRR $=$ Invest, It exceeds the investors minimum required return

ERR $Do$ not invest, $it$ does not make the desired amount for risk adjusted returns