An economy is made up of three stocks - A, B and C. Information on the stocks is as follows:

Company	Market value of shares	Beta
A	50,000,000	1.1
B	20,000,000	0.8
C	10,000,000	0.9

There also exists a risk-free asset whose return is 5% per annum. The return on this market is 10%.

a. What is the expected return of each company?

b. Stuart wishes to form a portfolio that has exactly the same risk and return as the market. He has $20,000 to invest. How much should he buy of each stock (in dollars)?

c. If Stuart wishes to have a portfolio with slightly more risk than the market portfolio, but wishes to hold the most efficient portfolio possible how can he achieve this? If he wishes to hold an efficient portfolio whose beta is 1.2, how much must he hold in each asset (he still has $20,000 to invest)? What is the expected return of this portfolio?