3.A Consider the market model as follows R_{p= p} + b_pR_M + e_p

And R² as R²⁼ (b_(p *)^2 S_M^2)/(S_P^2)

S Denotes standard deviation; p for portfolio; M for market; and b denotes beta.

Assume beta of your portfolio is 0.88, standard deviation is 20 % and standard deviation of market is 16 % . Calculate R².

3.B State the range in R^2, and compare your calculated R² in 3 A to the range in R². Is your portfolio very well diversified? Why?