Question: 3. Risk and returns [10 points ] a. Calculate expected return of the portfolio with 40% investment in stock A and 60% investment in stock

3. Risk and returns [10 points ] a. Calculate expected return of the portfolio with 40% investment in stock A and 60% investment in stock B. b. Calculate CAPM returns for stock A and B given that risk-free rate is 2 percent and market retum is 6 percent. Stock A's beta is 0.9 and stock B's beta is 1.5

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