Question: Please show all work so I can learn how to do it!!! Please post formula sheet as well. Thank you! Problem 1 You observe the

Please show all work so I can learn how to do it!!! Please post formula sheet as well. Thank you!

Problem 1 You observe the following information in a market where the CAPM holds B levered Expected annual return Annual standard deviation 45% Stock A 1.8 16.8% 13.2% Stock B 1.2 30% The correlation between stock A and the market is 80%. a If the CAPM holds for both stocks, please find the expected annual market return and the risk-free rate b) Consider a portfolio that is split (unevenly) between the risk-free asset and the market. If the annual standard deviation of this portfolio is 16%, what is the expected annual return on this portfolio

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