1. Use the following information to answer the questions. Expected return Standard Deviation Beta Security 10.0% S&P 500 >* 5.0% 5.096 pice Risk-free security 15.0% Stock D Stock E 25% ( % Stock F 1) Figure out the market risk premium using S&P 500 and the risk-free security (10points) E( ) = 0.05 +1.0 (0.10 - 0.05) - 0.1 or 10%. 2) Figure out the beta for Stock D and the expected return for Stock E using the CAPM equation. (30points) 10.15 = 0.05 + 13 (0,15 -0.05) - - 0,15 -0.05 (0,15-0, 05) - = 0.145 - 14,5 You forms Given bred return 3) You form a complete portfolio by investing $6,000 in S&P 500 and $4,000 in the risk- free security. Given the information about S&P 500 and the risk-free security above. figure out a) the expected return, b) the standard deviation, and c) the beta for the complete portfolio. (40points) 1. Use the following information to answer the questions. Expected return Standard Deviation Beta Security 10.0% S&P 500 >* 5.0% 5.096 pice Risk-free security 15.0% Stock D Stock E 25% ( % Stock F 1) Figure out the market risk premium using S&P 500 and the risk-free security (10points) E( ) = 0.05 +1.0 (0.10 - 0.05) - 0.1 or 10%. 2) Figure out the beta for Stock D and the expected return for Stock E using the CAPM equation. (30points) 10.15 = 0.05 + 13 (0,15 -0.05) - - 0,15 -0.05 (0,15-0, 05) - = 0.145 - 14,5 You forms Given bred return 3) You form a complete portfolio by investing $6,000 in S&P 500 and $4,000 in the risk- free security. Given the information about S&P 500 and the risk-free security above. figure out a) the expected return, b) the standard deviation, and c) the beta for the complete portfolio. (40points)