Question: A security's standard deviation equals 25%, and its random rate of return is summarized as follows: ri-0.04 + 1.45 rM +Ej, where M refers to

A security's standard deviation equals 25%, and its random rate of

A security's standard deviation equals 25%, and its random rate of return is summarized as follows: ri-0.04 + 1.45 rM +Ej, where M refers to the market portfolio, and PIM is the correlation coefficient between security i and the 0.521/2 market portfolio. It is assumed that and rM are uncorrelated. (Keep 4 decimal places to your answers, e.g. xxx.1234.) 1. What is the security's beta? 2. What is the variance of the market portfolio? 3. What are its systematic and diversifiable risks? Systematic Risk: ; Diversifable Risk

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