Question: 5. CAP.M a. Suppose the expected return for company X and company Y te 5% and 15% respectively, Company has a beta or 0.4 while

5. CAP.M a. Suppose the expected return for company X and company Y te 5% and 15% respectively, Company has a beta or 0.4 while company Y has a bota of 1.2. What are the risk tree rate and the market risk premium? b. A mutual fund manager expects her portfolio to earn a rate of return of this year. The beta o her portfolio is 0.8. If the rate of retur available on risk-free assets is 4% and the expected retum to the market portfolio is 11%, should you invest in this mutual fund? c. Suppose that the TSX, with a beta equals 1.0, has an expected return of 8% and Treasury bills provide a risk-free return of 2%. Construct a portfolio from these two assets with an expected return of 4%. What is the beta of this constructed portfolio

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