Consider a CAPM economy. The risk free rate (rf ) is 3% and the expected market return (rM) is 11%. Compute the expected return of the following stocks or portfolios. Total: 20 marks.

(a) Stock 1: = 0.80. (5 marks)

(b) Stock 2: = 1.20. (5 marks)

(c) Portfolio 1: The proportions invested in stock 1, stock 2, and risk free asset are 40%, 40%, and 20%, respectively. (5 marks)

(d) Portfolio 2: The proportions invested in stock 1, stock 2, and risk free asset are 60%, 70%, and -30%, respectively. (5 marks)