A. Annual risk-free rate is 4%. Annual expected return on market portfolio is 12% and stock S has a Beta of 0.5. Predict with CAPM the annual expected return on S?

B. The Expected return on S = 10%, if CAPM is correct, is S underpriced or overpriced?

C. Initial wealth is x,you invest yf per year. The remaining (X-Y) in assets A that has uncertain annual rate return r_a, with a standard deviation _a. Let V = value of your wealth after one year. Write equation of V and standard deviation V.