Question $3$

$3\mathrm{.}1$ The following data is available for a risky portfolio managed by you:

Expected rate of return $=15\%$

Standard deviation of portfolio $=27\%$

T$-$bill rate $=8\%$

Required

Calculate the expected return and standard deviation of a client's portfolio who wishes to invest $70\%$ in the risky portfolio and $30\%$ in T$-$Bill money market.

$3\mathrm{.}2$ Calculate the beta of a porffolio, given the following details:

$E(rp)=24\%rf=9\%E(rm)=20\%$

$3\mathrm{.}3$ What are assumptions of the Capital Asset Pricing Model $($CAPM$)?$

$3\mathrm{.}4$ Why are T$-$Bills considered to be risk free

$3\mathrm{.}5$ What is the difference between money markets and capital markets?