Problem $2$ Suppose that you open your trading terminal on February $6,$ and see the

market parameters of four assets: The riskless asset $(f),$ an individual stock $($stock $x),$ a

mutual fund $($fund $Y),$ and the market portfolio of risky assets $(M).$ Based on the information

from the terminal, you build the following table:

a$)$ What are the alphas $()$ of the stock $x$ and of the fund $Y?$ According to CAPM,

are they underpriced, overpriced, or priced correctly?

b$)$ What are the Sharpe ratios of the stock $x$ and of the fund $Y?$

c$)$ On February $7$ you learn that what you saw on February $7$ was due to a temporary

mispricing of some assets. Luckily, on February $7$ all assets are priced correctly.

Suppose that standard deviations and betas of the assets haven't changed. Also,

suppose that the expected return on the market portfolio and the riskless asset are

the same as on February $6.$

On February $7,$ your client asks you to build a portfolio that contains $40\%$ of fund

$Y,30\%$ of the market portfolio, and $50\%$ of stock $x($the client suggests to finance

the amount in excess of her budget by borrowing at the risk$-$free rate.$)$ What is the

beta $()$ of this portfolio? What is its expected return? Is this portfolio efficient?