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1a) According to the CAPM, the market portfolio should be the portfolio with the highest Sharpe ratio. Explain in fewer than five sentences 1b) Suppose

1a) According to the CAPM, the market portfolio should be the portfolio with the highest Sharpe ratio. Explain in fewer than five sentences

1b) Suppose you are an asset manager who is designing an optimal portfolio for your client. Explain each of the following questions in fewer than five sentences.

i) What are the three steps in selecting the optimal portfolio?

ii) Now suppose the CAPM holds. How will your optimal portfolio selection change?.

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