(a) You have the following forecasts: Return on a stock with a beta of .6 = 12% Risk-free rate = 3% Rate of return on the market portfolio = 30% If the CAPM is valid, should you invest in this fund? Explain why or why not.

(b) Explain

(a) what the separation/mutual fund theorem is, and

(b ) why this property is important (i) to investors, and (ii) to portfolio/asset managers