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1.Assume the single index model holds. You own 2,000 shares of each of the following two stocks: StockStandard deviationBetaPrice per share A 50%1.6$25 B 30%0.8$15

1.Assume the single index model holds. You own 2,000 shares of each of the following two stocks:

StockStandard deviationBetaPrice per share

A50%1.6$25

B30%0.8$15

The standard deviation of return on the market portfolio is 25%.

(a) What is the beta of your portfolio?

(b) What is the residual variance of return on stock A?

(c) What is the standard deviation of return (%) on your portfolio?

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