1. The table provides data on two risky assets, A and B, the market portfolio M and the risk-free asset F. Column heading A, B, M and F are variance and covariance

Asset	Expected Return %	A	B	M	F
A	10.8	324	60	48	0
B	15.6	60	289	96	0
M	14.0	48	96	80	0
F	6.0	0	0	0	0

An investor wants an expected return of 12% considering three ways (a) invest in A and B (b) invest in B and F (c) invest in M and F.

(d) For these options, calculate the portfolio weights portfolio standard deviation. Show that assets A and B are priced according to the capital asset pricing model and, in the light of this result, comment on your findings.

Please provide some form of explanation on how you arrived at your answers