Problem $8-20$

Interpreting beta A firm wishes to assess the impact of changes in the market return on an asset that has a beta of $1\mathrm{.}20.$

a$.$ If the market return increased by $15\%,$ what impact would this change be expected to have on the asset's return?

b$.$ If the market return decreased by $8\%,$ what impact would this change be expected to have on the asset's return?

c$.$ If the market return did not change, what impact, if any, would be expected on the asset's return?

d$.$ Would this asset be considered more or less risky than the market? Explain.

Answers $($insert your answers in the highlighted cells; use cell references, equations, and functions wherever possible$)$

a$.$ If the market return increased by $15\%,$ what impact would this change be expected to have on the asset's return?

Beta Change in Market Return Change in Asset's Return

b$.$ If the market return decreased by $8\%,$ what impact would this change be expected to have on the asset's return?

Beta Change in Market Return Change in Asset's Return

c$.$ If the market return did not change, what impact, if any, would be expected on the asset's return?

Beta Change in Market Return Change in Asset's Return

d$.$ Would this asset be considered more or less risky than the market? Explain.