Question: Question 2 (10 marks) Expected Standard Securities Return Deviation Google 19.29 36% Microsoft 21.9% 35% Apple 12.0% 25% Market 12.0% 10% Portfolio Correlation Matrix Market

Question 2 (10 marks) Expected Standard Securities Return Deviation Google 19.29 36% Microsoft 21.9% 35% Apple 12.0% 25% Market 12.0% 10% Portfolio Correlation Matrix Market Google Microsoft Apple Portfolio 1.0 0.7 0.6 0.5 1.0 0.5 0.6 1.0 04 1.0 The risk-free interest rate is 3%. (a) Given the correlation matrix, what is the covariance between Google and the Market? (2 marks) (b) Given the correlation matrix, what is the beta of Microsoft? (2 marks) (C) Show that Microsoft is priced according to the CAPM. (2 marks) (d) What is the expected return and volatility of a portfolio that consists of a long position of $10,000 in Microsoft and a short position of $2,000 in Apple? marks)

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