7.

a)

If the expected rate of return on the market portfolio is 14% and the risk-free rate is 6%,

find the beta for a portfolio that has an expected rate of return of 10%. What assumptions

concerning this portfolio and/or market conditions do you need to make to calculate the

portfolio's beta?

b)

What percentage of this portfolio must an individual put into the market portfolio in order

to achieve an expected return of 10%