Finance Please show working not in excel and answer all questions (a, b, c, d, e, f, g, h)

Consider a market that consists of only two assets, A and B. Asset A has a weight of 0.4 (40%) in the market portfolio and a standard deviation of 0.2 (20%). Asset B has a standard deviation of 0.5 (50%). The correlation between the two assets is 0.3. The expected return on the market is 13%, E[rM ] = 0.13 and the risk free rate is 3%, rf = 0.03.

(a) What is the variance of the market portfolio?

(b) What are the covariances with the market portfolio of the two assets?

(c) What are the CAPM s of the two assets and the market portfolio?

(d) What are the reward-to-risk (use variance as risk) ratios of the two assets and the market portfolio?

(e) What are the contributions of each asset to the market excess return, E[rM ] rf ?

(f) What are the contributions of each asset to the market variance, M2 ?

(g) What are the contributions of each asset to the reward-to-risk ratio of the market?

(h) Suppose you had found that the contribution of asset A to reward-to- risk ratio of the market was 1 and that the contribution of asset of B to the same ratio was 0.8. How could you construct a portfolio that beats the market? Could this be an equilibrium?