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4. (20 points) Consider the following assets: Bad Okay Good Market M -5% 5% 15% Asset X -2%-3% 25% Asset Y -4%-6% 30% Assume each

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4. (20 points) Consider the following assets: Bad Okay Good Market M -5% 5% 15% Asset X -2%-3% 25% Asset Y -4%-6% 30% Assume each scenario is equally likely Do the following: a.) Compute the market betas for assets X and Y. b.) Compute the correlations for X and Y with M. c.) Assume you were holding only M. You now are selling 10% of your M portfolio to replace it with 10% of either X or Y. Would an M & X portfolio or M & Y portfolio be riskier

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