
a)
To discuss:
Required
Introduction:
b)
To discuss:
Graph on security market line.
Introduction:
The security market line (SML) is a line, which shows the relationship between the risk, which is measured by beta and the required rate of return for the individual securities.
c)
To discuss:
Beta.
Introduction:
Beta is an indicator of the risk tha measures the systematic risk of a risky investment by comparing the risky investment with the average risky asset in the market. Thus it measures the non diversifiable risk.
d)
To discuss:
Calculation of the new required rate of return attributed to increased risk aversion.
Introduction:
The security market line (SML) is a line, which shows the relationship between the risk, which is measured by beta and the required rate of return for the individual securities.
Capital asset pricing model or CAPM establishes the relationship between the projected return for assets and systematic risk on the stocks.
e)
To discuss:
Impact of the changes on the required rate of return.
Introduction:
The security market line (SML) is a line, which shows the relationship between the risk, which is measured by beta and the required rate of return for the individual securities.
Capital asset pricing model or CAPM establishes the relationship between the projected return for assets and systematic risk on the stocks.

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Chapter 8 Solutions
Principles of Managerial Finance, Student Value Edition Plus MyLab Finance with Pearson eText - Access Card Package (15th Edition) (Pearson Series in Finance)
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