Question: Use the following information to answer the questions. Security Beta Standard Deviation Expected return S&P 500 Risk-free security Stock A Stock B Stock C 1.0

Use the following information to answer the questions.

Security

Beta

Standard Deviation

Expected return

S&P 500

Risk-free security

Stock A

Stock B

Stock C

1.0

0.0

0.6

( )

1.2

20%

15%

30%

25%

8.0%

4.0%

( )%

12.0%

( )%

5. You form a complete portfolio by investing $6,000 in S&P 500 and $4,000 in the risk-free security. Given the information about S&P 500 and the risk-free security on the table, figure out the following.

a. Figure out the standard deviation of the complete portfolio.

b. Figure out the slope of the Capital Allocation Line (CAL).

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