A company plans to invest in a portfolio made up of just two stocks A and B. The beta of A is 0.9 and the beta of stock B is 1.1. The risk-free rate is 4.0% and the market risk premium is estimated to be 6%.

What is the required rate of return on a portfolio consisting of 50% invested in stock A and 50% invested in stock B?

Security analysts are projecting an expected return of 11% on this portfolio, with a standard deviation of 3%. What is the probability that this portfolio is currently undervalued in the marketplace (i.e, what is the probability of earning more than the required rate of return)?