Question: Question b. What is the volatility? I Consider a world with only two risky assets, A and B and a risk free asset. Stock A

Question b. What is the volatility?

I Consider a world with only two risky assets, A and B and a risk free asset. Stock A has 200 shares outstanding, a price per share of $3.00, an expected return of 16% and a volatility of 30%. Stock B has 200 shares outstanding, a price per share of $4.00, an expected return of 10% and a volatility of 15%. The correlation coefficient between a and b is p = 0.4. Assume CAPM holds: a. What is expected return of the market portfolio

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