Q5. Consider the investment opportunity described below: Beta Jelly Roll's 1.75 Angels Unlimited 1.25 Video Viper...

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Q5. Consider the investment opportunity described below: Beta Jelly Roll's 1.75 Angels Unlimited 1.25 Video Viper 0.75 Shoe Lacers 0.40 Expected Return or Actual Return (E(r)) 19.0% 17.5% 12.4% 6.9% aa) Calculate the required rate of return given risk free rate rf = 4% and market return rm = 12%. b) Which of the investment is overpriced? Which have a positive Net Present Value when their cash flows are discounted at the CAPM required rate of return? Explain your reasoning. c) If the inflation goes up by 2.5% and market risk premium remains the same, which security is overpriced/underpriced/correctly priced. Explain. d) If inflation remains the same but market risk premium goes up to 10%, which security overpriced/underpriced/correctly priced. Explain is Q5. Consider the investment opportunity described below: Beta Jelly Roll's 1.75 Angels Unlimited 1.25 Video Viper 0.75 Shoe Lacers 0.40 Expected Return or Actual Return (E(r)) 19.0% 17.5% 12.4% 6.9% aa) Calculate the required rate of return given risk free rate rf = 4% and market return rm = 12%. b) Which of the investment is overpriced? Which have a positive Net Present Value when their cash flows are discounted at the CAPM required rate of return? Explain your reasoning. c) If the inflation goes up by 2.5% and market risk premium remains the same, which security is overpriced/underpriced/correctly priced. Explain. d) If inflation remains the same but market risk premium goes up to 10%, which security overpriced/underpriced/correctly priced. Explain is