(1) What is the expected return and standard deviation of a portfolio that is invested 50% in Stock A and 50% in Stock B? [13.6% and .8%] State Prob (state) Exp.Returns-A Exp.Returns-B Prosperity .80 20% Recession .20 18% (2) Using CAPM, what return should be required for IAA stock. Its beta is 1.20, the risk-free rate (T-bills) is 6% and the rate of return on the market portfolio (S&P 500) is 20%? [22.8%] and the risk premium is ( [16.8%]. 6% (3) IAA stock price was $21 last year and now it becomes $17 per share. The return on Stock IAA is ( ), given that no dividend is distributed. (4) Comparing your answers to (2) and (3), you should (buy or sell) IAA stocks. (5) What is the expected return and standard deviation of a portfolio that is invested 50% in Stock A and 50% in Stock B? [7.5% and 2.60%] State Prob (state) Exp.Returns-A Exp.Returns-B Prosperity .75 10% 2% Recession 25 5% 19% (6) Using CAPM, what return should be required for TAT stock. Its beta is 1.30, the risk-free rate (T-bills) is 5% and the rate of return on the market portfolio (S&P 500) is 22%? [27.1%] (7) Using CAPM, what return should be required for XBAY stock. Its beta is 2.50, the risk-free rate (T-bills) is 4% and the rate of return on the market portfolio (S&P 500) is 20%? [44%] (8) The beta for T-bills is: market as a whole, or an average stock, is: The beta for the stock [0, 1] (9) The return on Stock A is 8% and its standard deviation is 4% and the return on Stock B is 9% and its corresponding standard deviation is 5%. Which stock is risky?