#1)Suppose the risk premium on the market portfolio is 4% with a standard deviation of 20%. What is the risk premium on a portfolio invested 40% in GM and 60% in Ford, if they have betas of 1.4 and 1.0 respectively?

Answer #1:

#2)Which of the following portfolios cannot lie on the efficient frontier (pick one): Portfolio A: Expected return =11%, Standard deviation =10% Portfolio B: Expected return =5%, Standard deviation =6% Portfolio C: Expected return =13%, Standard deviation =12% Portfolio D: Expected return =12%, Standard deviation =15% Portfolio E: Expected return =14%, Standard deviation =13% Portfolio F: Expected return =3%, Standard deviation =5% Answer:

Answer #2: