Question: = 3. (20 points) Consider a world with two risky assets, stocks A and B, and a risk-free asset. The expected returns for the stocks

= 3. (20 points) Consider a world with two risky assets,

= 3. (20 points) Consider a world with two risky assets, stocks A and B, and a risk-free asset. The expected returns for the stocks are a 6% and is = 9%. The total market capitalization is $12 x 106, and stock A represents the fraction wa = of the market. a) If the price of stock A is $100, how many shares of A are there? b) What fraction wo of the market does Stock B represent, and what is the expected market return im? c) If Ba = , what is BB =? d) Assume CAPM, Fi=rs + Bilim -rf). What is the risk-free rate rf? =

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