A.) If the simple CAPM is valid, say whether the situation is possible or not?

Portfolio	Expected Return	Standard Deviation
Risk-free	7	0
Market	19	31
A	14	16

Not possible_______ or

Possible______

B.) Suppose that there are two independent economic factors, F₁ and F₂. The risk-free rate is 8%, and all stocks have independent firm-specific components with a standard deviation of 38%. The following are well-diversified portfolios:

Portfolio	Beta on F1	Beta on F2	Expected Return
A	1.4	1.8	28%
B	2.3	0.18	25%

What is the expected returnbeta relationship in this economy? (Do not round intermediate calculations. Round your answer to the nearest whole number. Omit the "%" sign in your response.)

E(r_P) = _____% + (_P1 _____%) + (_P2 ______%)