Question: Subject Financial market PLEASE ANSWER ALL THE SUBSECTION 2. Eggs and ham Saladin observes the following information regarding 4 individual shares: Actual Correlation with Name

Subject Financial market PLEASE ANSWER ALL THE SUBSECTION 2. Eggs and

Subject Financial market PLEASE ANSWER ALL THE SUBSECTION

2. Eggs and ham Saladin observes the following information regarding 4 individual shares: Actual Correlation with Name return Variance market portfolio Aragorn 0.064 16 0.8 Boromir 0.067 36 0.6 Frodo 0.12 169 0.9 Legolas 0.1135 196 0.7 The return on the market portfolio is 10%, and the market portfolio has a return variance of 64. The risk-free rate is 4%. Required: (1) Calculate the beta values for each share (2) Calculate whether all 4 shares plot on SML, and whether the results are consistent with the CAPM

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