8. The following information relates to two securities: X and Y: X Y Expected return (%) 20 25 Standard deviation (%) 30 40 Beta 0.85 1.20 The correlation between the returns of two securities is 0.75. The standard deviation of the market return is 20 per cent.

(a) Calculate the expected returns and standard. deviation of the portfolio of X and Y if you invest 40 per cent in X and 60 per cent in Y.

(b) How much is risk-free rate and how much. is the market rate of return?

(c) Calculate the portfolio (X and Y) beta if you invest 60 per cent in X and 40 per cent in Y.

(d) Calcualte the slope of CML.