(20 points) Suppose that there are only two stocks, X and Y, listed in a market There are 200 outstanding shares of stock X and 600 outstanding shares of stock Y Current prices per share are px = 40$ and pY = 20$. (i) What is the Suppose that the expected returns on stocks X and Y are = 10% and Y = 20%. Standard deviation of returns are = 15% and = 30%. Covariance between the returns is zero, that is XY 0 market portfolio in this market! (ii) What are the expected return and the standard deviation of return on the market portfolio? (iii) Calculate market betas, Bx and By, for stocks X and Y Suppose that the risk-free rate of return is ro-8% (iv) Verify that the Security Market Line holds for both stocks (20 points) Suppose that there are only two stocks, X and Y, listed in a market There are 200 outstanding shares of stock X and 600 outstanding shares of stock Y Current prices per share are px = 40$ and pY = 20$. (i) What is the Suppose that the expected returns on stocks X and Y are = 10% and Y = 20%. Standard deviation of returns are = 15% and = 30%. Covariance between the returns is zero, that is XY 0 market portfolio in this market! (ii) What are the expected return and the standard deviation of return on the market portfolio? (iii) Calculate market betas, Bx and By, for stocks X and Y Suppose that the risk-free rate of return is ro-8% (iv) Verify that the Security Market Line holds for both stocks