1. (2*4) Assume that CAPM accurately represents security returns (hence prices). Your portfolio consists of 50% invested in the risk-free asset and the remaining 50% is allocated as follows among four risky securities:

Security (i)	E(ri)	i	wii
1	0.076	0.2	10%
2	0.124	0.8	10%
3	0.156	1.2	10%
4	0.188	1.6	20%

1. What is your current portfolios expected return and beta?
2. If you wished to earn a 12% expected return on your portfolio, one possibility would be to sell some of your holdings in the risk-free asset and invest the proceeds from that sale in the market portfolio (M). If you decide to rebalance your portfolio this way, what would be your new portfolio weights and your portfolios overall beta?
3. (iii)Alternatively, you could invest your portfolio only in the market portfolio and the risk-free asset. What would be your portfolio weights to obtain a 12% expected return?
4. (iv)Which portfolio rebalancing strategy would you prefer?