Chapter 13 Homework This assignment is based on Course Learning Objectives CLOI & CLOS, and the following Module 4 Learning Objectives: Calculate various measures for risk. Explain the Capital Asset Pricing Model 1. A: The stocks of Apple and Amazon have the following expected returns: Se alle Mobility of State of Apple Rotun if Amare State Ocus State O Normal Which company's stock is riskier, based on standard deviation? (20 points) B: If you have 120 shares of Apple's common stock ($171.05 per share) and 90 shares of Amazon's common stock (81162,35 per share) in your portfolio, what is the expected return on your portfolio? (i5 points) 2. Stock Y has a beta of 1.30 and an expected return of 15.3%. Stock Z has a beta of 0.70 and an expected retum of 9.3%. If the risk-free rate is 5.5% and the market risk premium is 6.8%, are these stocks correctly priced? (15 points) 3. You have one million USD and want to create a portfolio equally as risky as the market. Given this information, fill in the rest of the following table: (15 points) Art Investment Bell Seck A $195.000 Stock B 540.000 LIS Suck 4. Suppose you observe the following situation: Security Besa Expected Retur Pete Cap, LIS 2.0 Repete C094103 Assume the two securities are correctly priced. Based on CAPM, what is the expected return on the market? What is the risk-free rate? (15 points) 5. Explain the CAPM. [hint: we need to discuss systematic and unsystematic risks, diversification, assumptions CAPM makes, SML line, the model, things CAPM can't explain, etc. Everything should be linked with the development of the CAPM) (20 points)