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Consider two portfolios from the Capital Market Line (CML), A and B, given the following information: Portfolio A: has an expected return of 10% and

Consider two portfolios from the Capital Market Line (CML), A and B, given the following information:

Portfolio A: has an expected return of 10% and a standard deviation of 24%.

Portfolio B: has an expected return of 10.6% and a standard deviation of 26%.

a) Illustrate the CML, indicating portfolio A and B on CML.

b) What is the Sharpe ratio of portfolios located on the CML?

c) What is the risk-free rate?

d) Another portfolio, P, has an expected return of 9% and a standard deviation of 20%. Is this portfolio correctly priced?

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