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Question 1 (60 points) The yearly expected return by the market portfolio E(rm) is 12%. The annual risk-free rate is 3%. There are 4 stocks with their betas as Bi=-0.5, B2=0, B3=1, B4=1.5. (i) Calculate the expected return for each of the four stocks by CAPM (30 points) (ii) For Stock 4, if your estimation of the beta is 1.6, how much is your estimation of the stocks expected return (16 points) (iii) Calculate the alpha based on your estimation for Stock 4 (14 points)