a. (5 points) An investor wishes to construct a portfolio consisting of a 70% allocation to a stock index and a 30% allocation to a risk-free asset. The return on the risk-free asset is 4.5% and the expected return on the stock index is 12%. The standard deviation of returns on the stock index is 6%. Calculate the expected standard deviation of the portfolio.

b. (5 points) Consider a risky asset that has a standard deviation of returns of 20. Calculate the covariance between the risky asset and a risk-free asset.

8.2 Calculate the expected return for D Industries which has a beta of 1.0 when the risk-free rate is 0.03 and you expect the market return to be 0.11.

8.3 Calculate the expected return for E Services which has a beta of 1.5 when the risk-free rate is 0.05 and you expect the market risk premium (a.k.a. the excess return on the market) to be 0.11.

8.4 The correlation between the market and asset A is 0.65, the covariance between the market and asset A is 0.02, and the standard deviation of asset A is 0.20. What is the assets beta?