Given an expected return for the market of 12 percent, with a standard deviation of 20 percent, and a risk-free rate of 8 percent, consider the following data and calculate the required return for each stock using the CAPM.

Stock Beta R_i(%)

1 0.8 12

2 1.2 13

3 0.6 11

Question 1 options:

	9.7%; 10.6%; 11.0%
	3.2%; 4.8%; 2.4%
	11.2%; 12.8%; 10.4%
	17.6%; 22.4%; 14.0%

Calculate the risk (standard deviation) of the following two-security portfolio if the correlation coefficient between the two securities is equal to 0.5.

	Variance	Weight (in the portfolio)
Security A	0.10	0.3
Security B	0.20	0.7

Question 2 options:

	0.3697
	0.1572
	0.0247
	3.6970