Hello,

Can someone help me solve and understand these two questions? The two question, 25 & 27, from Ch.13 of the textbook, "Fundamentals of corporate Finance 11e by Ross"

1- You have $100000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 13.6 percent. If Stock X has an expected return of 11.4 percent and a beta of 1.25, and Stock Y has an expected return of 8.68 percent and a beta of .85, how much money will you invest in Stock Y? How do you interpret your answer? What is the beta of your portfolio?

2- Suppose you observe the following situation:

Security Beta Expected Return

Pete Corp. 1.21 0.1079

Repete Co. 0.83 0.0843

Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?