1(a) Calculate the risk and return of the new portfolio whereby the funds are invested equally in A, B, X and Y. (Now the investor has 1/4 weightage each in assets A, B, X and Y.) Depict the Point of this new portfolio as P on the same diagram as above. Is P the same as M?

1(b) Assume the market in the country of Eutania comprises only these 4 assets and the market capitalization for them are $25 billion each. Also assume the risk free rate is 3%. Plot the Capital Market Line (CML) on the same graph and label it CML.

1 (c) Plot the Security Market Line (SML) on a new graph. Label the 2 axes clearly.