Question: Consider data resulting from a regression of security returns on to market index reflecting the market model. Security Alpha Beta A -1.5 1.6 B 3.5

Consider data resulting from a regression of security returns on to market index reflecting the market model.

Security	Alpha	Beta
A	-1.5	1.6
B	3.5	0.7

2.A Calculate alpha and beta of a portfolio consisting in 20 % allocation to security A and 80% allocation to security B. Show the resulting single index model equation or market model equation.

2.B: According to alpha and Beta of the portfolio you have calculated, if the market return is 10 % what would be (calculate) return on your portfolio.

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