1.) Jar Jar forms an aggressive growth portfolio by investing 23% of his savings in Fordstock, 24% in Toyotastock, 22% in Subarustock, 10% in an index fund, and the last 21% is allocated on a bond fund. Assume for simplicity that the index fund is a good proxy to the market portfolio and has a beta equal to 1, whereas the bond fund is a good proxy to the riskless asset. The beta of Ford stock is 1.21, the beta of Toyotais 1.36, and the beta of Subaruis 1.74. If the expected return of the market index is 12% and the risk-free asset yields 4%, what are the beta and the expected return of Jar Jar's portfolio?Give your answer roundedto two decimal places.

a.) What is the beta of the portfolio?

b.) Based on the value of P, what is the expected return of JarJars's portfolio?Give your answer rounded to two decimal places.

2.) Lucas builds a portfolio by investing in two stocks only: Samsung (SMSN) and Nokia (NOK). According to the CAPM, the expected risk premium (i.e., the expected return minus the risk-free rate) of SMSN is 8.5% and the expected risk premium of NOK is 6.64%. The beta of SMSN is equal to 1.3. If Lucas puts 64% of his money in SMSN stock and 36% in NOK stock, what is the approximate beta of his portfolio?

3.) The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term annual return of 9%. The expected return of the market index is RM = 9.3%, the volatility of the market index is M= 11.7%, and the risk-free asset earns Rf= 2.6%. The CFO has studied similar projects of other companies and believes that the covariance between the returns of this project and the returns of the market is P,M= 0.0102 (in decimal form).

a.) What is the beta of the project?Enter your answer rounded to two decimal places.

b.) According to the CAPM, what should be the required return of the project given its beta?Enter your answer rounded to two decimal places.

c.) Should the CFO accept the project?