1. There are two mutual funds, A and B with the following information, Security The Market Ri Gi 0.20 Pim (i) (iv) (vi) (vii) 0.08 (ii) (v) (vii) The Riskfree Bond 0.03 (iii) Mutual Fund A 0.07 I 0.12 Mutual Fund B where o is the standard deviation, and pim is the correlation with the market portfolio. Assume that the CAPM holds, with fund A being efficient. (a) What are the answers to (i)-(v) above without doing any computation? (b) From given information, compute (vi) and (vii) in the table above. (c) If you are using the CAPM as a benchmark, which fund should you buy? [hint: what is the return implied by the CAPM] 0.09 0.30 1.2