1.a Explain how you build , construct or design a portfolio in the context of the capital asset pricing model CAPM. Show by way of graph as well.

1.B Does your approach in 1A above lead to an efficient portfolio? Explain.

2. Consider the table below showing return & risk for two funds.

Mutual Funds	Returns	Standard Deviation
Fund A : Well diversified value fund	10%	16%
Fund B: A risk less Fund	3.5%	0%

2.A Show risk & return for a security consisting of 60 % in risky fund & 40 % risk less fund. Show calculations.

2.B Show return & Risk for a portfolio consisting of 130 % in risky fund in the context of CAPM. Show calculations.