Consider a single-index model economy. The index portfolio M has E(RM) = 4%, M = 20%. An individual asset i has an estimate of i = 1 and ^2(ei) = 0.02 using the single index model Ri = i + iRM + ei. The forecast of asset is return is E(ri) = 10%. rf = 5% (a) According to asset is return forecast, calculate i. (b) Calculate the optimal weight of combining asset i and the index portfolio M. (c) Calculate the Sharpe ratio of the index portfolio M and the portfolio optimally combining asset i and the index portfolio M