Part 1: Initial Post:

1. Review the "Risk, Return, and the Capital Asset Pricing Model" Mini-Case (pg. 237).
2. Answer question #7 only. Write atleast 250words.

7. Which of these two-stock portfolios do you prefer? Why? Mini-Case Risk, Return, and the Capital Asset Pricing Model On your first day as an intem at Tri-Star Management Incor-5% over the next year. Also, information from an investment porated the CEO asks you to analyze the following infor- advising service lists the current beta for Tech.com as 1.68 mation pertaining to two common stock investments, Tech. and for Sam's Grocery as 0.52. You are provided a series of com Incorporated and Sam's Grocery Corporation. You are questions to guide your analysis. told that a one-year Treasury Bill will have a rate of retum of Estimated Rate of Return Tech.com S&P 500 Economy Recession Average Expansion Boom Probability 30% 20% 35% 15% -20% 15% 30% 50% Sam's Grocery 5% 6% 8% 10% -4% 11% 17% 27% Continued 7. Which of these two-stock portfolios do you prefer? Why? Mini-Case Risk, Return, and the Capital Asset Pricing Model On your first day as an intem at Tri-Star Management Incor-5% over the next year. Also, information from an investment porated the CEO asks you to analyze the following infor- advising service lists the current beta for Tech.com as 1.68 mation pertaining to two common stock investments, Tech. and for Sam's Grocery as 0.52. You are provided a series of com Incorporated and Sam's Grocery Corporation. You are questions to guide your analysis. told that a one-year Treasury Bill will have a rate of retum of Estimated Rate of Return Tech.com S&P 500 Economy Recession Average Expansion Boom Probability 30% 20% 35% 15% -20% 15% 30% 50% Sam's Grocery 5% 6% 8% 10% -4% 11% 17% 27% Continued