15. A stock has a beta of .90 and an expected return of 13%. A risk-free asset currently earns 7%. a) What is the expected return on a portfolio that is equally invested in the two assets? b) If a portfolio of the two assets has a beta of .60, what are the portfolio weights? c) If a portfolio of the two assets has an expected return of 12 percent, what is its beta?

16. Stock M has a beta of 1.4 and an expected return of 25 percent. Stock N has a beta of .85 and an expected return of 15 percent. If the risk-free rate is 6 percent and the market risk premium is 10.3 percent, are these stocks correctly priced? Which one is undervalued or overvalued?