if you could show work Interpreting beta a firm wishes to assess the impact of c

Question

if you could show work

Interpreting beta a firm wishes to assess the impact of changes in the market return on an asset that has a beta of 1. 2. Note: Enter a negative percentage number if the asset return decreases. If the market return increased by 16%, what impact would this change be expected to have on the asset's return? If the market return decreased by 9%, what impact would this change be expected to have on the asset's return? If the market return did not change, what impact, if any, would be expected on the asset's return? Would this asset be considered more or less risky than the market?

Explanation / Answer

Hi, If you like my answer rate me lifesaver first...that way only I can earn points. Thanks CAPM model required return = risk free + beta * (market return - risk free return) beta = 1.2 a) total increase in asset return will be = 1.2 * 16% = 19.2% b) total decrease in asset return will be = 1.2 * 9% = 10.8% c) there will be no change in assets return d) since beta > 1, so this asset is more risky than market.

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