Assume the risk-free rate is 4%. For a fund XYZ with a beta of 1.2, its expected return according to CAPM is 16%. The market portfolio has a volatility of 20%. Calculate the following:

1. The expected return on the market portfolio is _____

2. The slope of SML is______

3. If the historical average of fund XYZ return is 14.5%. Fund XYZ has an alpha of ______

4. Fund XYZ is ._______(Input U for underpriced, O for overpriced.

5.. For a zero-beta stock, the expected return should be _______

6. The covariance between the zero-beta stock and the market should be ________.

7. The covariance between portfolio XYZ and the market is _______