1. Firm A has expected return of 12% and beta of 1.5. Firm B has beta of 1 and alpha of 1%. What would be the expected return of the market portfolio and the risk free rate according to the capital asset pricing model (CAPM)? (6 points) 2. Assume the CAPM is valid. a. Portfolio A with expected return of 20% and beta of 3; Portfolio B with expected return of 25% and SD of 4. Is this situation possible? Explain (6 points) b. Assume market portfolio with expected return of 18%; Portfolio A with expected return of 16% and beta of 0.9. Risk free rate = 10%. Is this situation possible under the CAPM? Explain (7 points)