An investor currently holds a portfolio that follows closely the composition of the SBF 120 index; he disposes also of the following predictions : expected market return =8% market standard deviation = 2% risk free asset return = 6% he considers yielding a fraction ( alpha) of his portfolio to invest in a risk free asset in such a way that return expectations of the new portfolio would be 7%

a) what is the value of (beta) of the current portfolio ? b) what will be , expressed in function of (alpha) the value of (beta ) I f the new portfolio? c) calculate alpha ? d) identify the risk of the new portfolio ?