1. You are considering a portfolio of three stocks with 30% of your money invested in company X, 45% of your money invested in company Y, and 25% of your money invested in company Z. If the betas for each stock are 1.22 for company X, 1.46 for company Y, and 1.03 for company Z, what is the portfolio beta?

a. 1.33

b. 1.28

c. 1.24

d. 1.00

2. The Security Market Line intercepts the vertical axis at

a. the market risk premium.

b. beta = 1.

c. the expected return on asset i equals the expected rate of return on the market portfolio.

d. the risk-free rate.