Question: Currently under consideration is an investment with a beta, ? , of 1.50. At this time, the risk -free rate of return , Rp is

Currently under consideration is an investment with a beta, ?, of 1.50. At this time, the risk -free rate of return, Rp is 7%, and the return on the market portfolio of assets, Rm is 10%. You believe that this investment will earn an annual rate of return of 11%.

If the return on the market portfolio were to increase by 10%, what would you expect to happen to the investments return? What if the market return were to decline by 10%.

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