#$3$ : The following table provides information beta and expected returns for several stocks in the market.

A$.$ What stock is the risk free asset?

Answer

B$.$ Find the expected return on the market portfolio.

C$.$ Find the expected return for Stock DD$.$

D$.$ Find the beta for Stock EE

E$.$ Find the reward$-$to$-$risk ratio based on CAPM.

F$.$ Stock FF has a beta of $1\mathrm{.}6$ and an expected return of $16\%.$ Is this stock correctly priced according to CAPM? Provide an explanation for your answer.

G$.$ You created a portfolio with equal weights in $AA,BB,CC,DD,$ and EE$.$

G$\mathrm{.}1.$ What is the expected return of the portfolio?

G$\mathrm{.}2.$ What is the beta of the portfolio?

G$\mathrm{.}3.$ Show that the portfolio is correctly priced by CAPM.