Question: A. estimate a beta for each of the following securities assuming that the standard deviation of returns for the market portfolio (m) is 8.0 percent.

A. estimate a beta for each of the following securities assuming that the standard deviation of returns for the market portfolio (m) is 8.0 percent.

Security P: expected return: 12% standard deviation=10% correlation coefficient between returns for the security and market portfolios= .80

Security Q: expected return: 18% standard deviation=20% correlation coefficient between returns for the security and market portfolios= .60

Security R: expected return: 15% standard deviation=15% correlation coefficient between returns for the security and market portfolio= .40

B. based on the Capital asset pricing model with a risk free rate of 7 percent and a market risk premium of 8.8 percent, which of the securities P,Q, or R (if any) appear to be attractive investments?

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