Emily requires your support in evaluating a couple of investment opportunities she currently has available. Information about the securities she is currently considering to purchase has been supplied to you:

	SPG	MPL	TPM
Expected return	23%	6%	19%
Standard deviation	19%	4%	15%
Beta	1.40	0.50	1.10

Emily is currently interested in creating a portfolio by investing 55% of her funds in security MPL and the rest of her funds in security TPM. The correlation of returns between these two securities is 0.32.

Required:

1. If Emily creates the portfolio as she originally intended, calculate the expected return and the standard deviation of the resulting portfolio.
2. Assuming portfolio returns are normally distributed, what is the probability of the returns being greater than 23% for the portfolio created in Part a)?
3. The ASX200 Index (market portfolio) is currently valued $7,182. Assuming the market is expected to appreciate in value to $7,628.90 in one year, determine the expected rate of return on the market portfolio.
4. Assuming portfolio returns are normally distributed, what is the probability of incurring a return less than the market portfolio (as determined in Part c)) for the portfolio created in Part a)? Assume a market return of 10% p.a. if you did not answer Part c)