1. (CAPM; covariance and beta) Suppose that the relevant equilibrium model is the CAPM with unlimited borrowing and lending at the risk- free rate. (a) Fill in the three blanks in the following table (Please show your calculation for full credits). A 1.2 Asset Expected return Beta ( ) 21% 10% 0.9 Covariance with the market portfolio 0.3 0.5 ( ) (b) What is the risk free rate in part (a)? (c) If an investor forms a new portfolio that has a 30% weight on asset B and a 70% weight on asset C. What is the covariance between this new portfolio and the market portfolio? 1. (CAPM; covariance and beta) Suppose that the relevant equilibrium model is the CAPM with unlimited borrowing and lending at the risk- free rate. (a) Fill in the three blanks in the following table (Please show your calculation for full credits). A 1.2 Asset Expected return Beta ( ) 21% 10% 0.9 Covariance with the market portfolio 0.3 0.5 ( ) (b) What is the risk free rate in part (a)? (c) If an investor forms a new portfolio that has a 30% weight on asset B and a 70% weight on asset C. What is the covariance between this new portfolio and the market portfolio