Question 4 A. You are told that the expected return of the market portfolio is 10%, and its standard deviation is 10%. There exists a risk-free asset in the economy. You hold an efficient portfolio with an expected retum of 12% and a standard deviation of 15%. (hint: The effficent portfolio is a combination of the market portfolio and the risk-free asset.] i in forming this efficient portfolio do you borrow or lend? Support your answer with relevant calculations. i. What is the risk-free rate? B. Describe precisely one way that you would test if a particular stock market is strong-form efficient? C. Discuss the key assumptions of Arbitrage Pricing Theory (APT) model and the implications of these assumptions