2 stocks S_A and S_B is in a portfolio.The following are these stock shares, prices, expected return rates, annual volatility, and beta:

S_A and S_B returns have a correlation of 0.65. The market's expected return rate is 12 percent, the return volatility of the market is 30 percent, and the risk-free rate is two percent. All risky assets returns follow normal distributions.

a) Are S_A and S_B undervalued, overvalued, or fairly valued, according to CAPM?

b) What is the portfolio's expected return rate? What is the return's variance?

c) What is the portfolio's beta?

A B #shares 100000.0 50000.0 price 50.0 100.0 expected return 8.000% 18.000% volatility 20.0% 40.0% beta 60.0% 120.0%