e&f only

Assume that the risk-free rate Rf=3% and the expected rate of return E[RM] on the market portfolio M equals 6%. The standard deviation of market returns is 12%. The market portfolio is a portfolio of 3 stocks. We report the beta of each stock in the table below. Using the above information, determine the following. a) Calculate the beta of stock B in the market portfolio. [5 marks] b) Portfolio P is a linear combination of the risk-free rate and the market portfolio. What are the weights on the market portfolio and the risk-free rate if Portfolio P has a beta of 0.5 ? [2 marks] c) Portfolio Q is a linear combination of the risk-free rate and the market portfolio. What are the weights on the market portfolio and the risk-free rate if Portfolio Q has a beta of 1.5 ? [2 marks] d) Calculate the expected return and standard deviation of returns for portfolio P and portfolio Q. [4 marks] e) Plot the efficient frontier and the capital market line, and indicate the position of the market portfolio. Mark the location of portfolio P and portfolio Q. Explain which portfolio is consistent with being a borrowing investor, and which portfolio is consistent with being a lending investor. [5 marks] f) What is the Sharpe ratio of the market portfolio, and portfolios P and