Answer the following questions a) Currently, your portfolio consists of $200 invested in stock A with a beta of 1A and $300 in stock with a beta of 0.6. You have another $500 to invest and want to divide it between an asset with a beta of 18 and a riske-free asset How much should you invest in the risk-free asset if you want your portfolio beta to be 1.20? How much should you invest in the risk-free asset if you want your portfolio beta to be 1.50? What is the economic meaning to have your investment in the risk-free asset to be positive and/or negative? [6 marks] b) You have been asked to evaluate 2 pollution control devices. The wet scrub costs $100 to set up and $50 per year to operate. It must be completely replaced every 3 years, and it has no salvage value. The dry scrub device costs $200 to set up and $30 per year to operate. It lasts for 5 years and has no salvage value. Assuming that pollution control equipment is replaced as it wears out, which method do you recommend if the cost of capital is 10 percent? (8 darks)