Question: Please show all your work, so I can learn how to solve it!! You observe the following information in a market where the CAPM holds:

Please show all your work, so I can learn how to solve it!!

You observe the following information in a market where the CAPM holds: 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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