1. Suppose you have $50 to invest in the S&P TSX 60 index. You decide to borrow an additional $50 so you can buy $100 worth of the index. If the standard deviation of returns on the index is 20% on an annual basis, what is the portfolio variance of your position?

2. The market portfolio has a standard deviation of 20% and the covariance between the returns on the market and those of stock W is 0.08.

What is the markets beta? What is the beta of stock W? How do we interpret this value?