= We consider two risky assets A and B that are on the Capital Market Line. The numerical values for the two assets are: The expected returns are: Ma = E[ra] = 12% and Up = E[TB] = 20% The volatilities are: 0 A 3% and B 5% We also know the expected return of the market portfolio is MM 16%. Questions: 1. What is the return in excess of the risk-free rate on the market? 2. What is the volatility of the market return? 3. What is the Security Market Line? Compute the betas of the two risky assets. = = We consider two risky assets A and B that are on the Capital Market Line. The numerical values for the two assets are: The expected returns are: Ma = E[ra] = 12% and Up = E[TB] = 20% The volatilities are: 0 A 3% and B 5% We also know the expected return of the market portfolio is MM 16%. Questions: 1. What is the return in excess of the risk-free rate on the market? 2. What is the volatility of the market return? 3. What is the Security Market Line? Compute the betas of the two risky assets. =