The variance of Bobsled Inc. is 2.5 and the variance of Luge Inc. is 1.6, in a market with a variance of 0.82 and an expected return of 6%. The covariance of Bobsled with the market is 0.984. The covariance of Bobsled with Luge is 0.4 and the correlation coefficient between Bobsled and Luge is 0.2. The risk-free rate (R_f) is 4%. Bobsled Incs stock price closes a $65 on December 2, 2021 and at $68 on December 3, 2021. Use CAPM [E(R_i) = R_f+ E(R_m-R_f)].

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In a portfolio with 30% Bobsled and 70% Luge, what return on Luge would you require to get the same return as the market?

.What is the variance of portfolio in ) above?