Question: 1. The expected return on HiLo stock is 13.69% while the expected return on the market is 11.5%. The beta of HiLo is 1.3. Assume

1. The expected return on HiLo stock is 13.69% while the expected return on the market is 11.5%. The beta of HiLo is 1.3. Assume CAPM holds, what is the risk-free rate of interest? A. 2.8% B. 3.1% C. 3.7% D. 4.2% E. None of the above

2. The efficient frontier of risky assets is A. the portion of the opportunity set that lies above the minimum variance (MV) portfolio. B. the portion of the opportunity set that represents the efficient standard deviations. C. the portion of the opportunity set that lies below the minimum variance (MV) portfolio D. the set of portfolios that have zero standard deviation. E. both A and D are true.

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