1) The risk-free rate is 3.5 percent and the expected return on the market is 11 percent. Stock A has a beta of 1.1 and a return of 12 percent. Stock B has a beta of .92 and a return of 10.25 percent. Are these stocks correctly priced? Why or why not?

2) A portfolio is invested 40 percent in stock A, 30 percent in stock B, and 30 percent in stock C. What is the expected return and standard deviation of this portfolio?