Question: RA = 3.5% + 0.65RM + eA RB = 1.6% + 0.80RM + eB M = 21%; R-squareA = 0.22; R-squareB = 0.14 Assume you

RA = 3.5% + 0.65RM + eA

RB = 1.6% + 0.80RM + eB

M = 21%; R-squareA = 0.22; R-squareB = 0.14

Assume you create a portfolio Q, with investment proportions of 0.50 in a risky portfolio P, 0.30 in the market index, and 0.20 in T-bill. Portfolio P is composed of 60% Stock A and 40% Stock B.

a. What is the standard deviation of portfolio Q? (Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What is the beta of portfolio Q? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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