Security Market Line systematic risk and expected returns. E(Ri)=Rf+(E(Rm)-Rf)xBi
1. Define each of the variables or terms in this equation.
2. Calculate the E(Ri) assuming that E(Rm) equals 12%, Rf equals 6%, and Bi equals 1.2.
Q-2. Assume that a projent has a negative NPV of $500 and an IRR of 10%. Is the discountrate used to calculate the NPV higherthan, lower than, or equal to 10%? compare and contrast these two tecniques using this example and focusing on IRR when NPV is possitive zero or negative.