1. Assume the assumptions of the CAPM, with E(rm)=[m]%, SDm=[s]% and the rf-=[f]%.If you have a stock that has a beta=[b] what is expected return of the stock?

2. Use the following information for stock ROCK and stock ROLL:

E(rROCK)=.11 SDrock=.20

E(rROLL)=.15 SDroll=.25

rf=.02 Correlation coefficient= .75

A) Find the expected return of a portfolio with 30% allocatedto stock ROCK and 70% allocated to stock ROLL

B) Find the standard deviation of a portfolio with 30% allocated to stock ROCK and 70% allocated to stock ROLL