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of the s and 's. In Simpleland there are only two risky stocks, A and B, whose details are 6. (Simpleland) listed in Table 7.4.

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of the s and 's. In Simpleland there are only two risky stocks, A and B, whose details are 6. (Simpleland) listed in Table 7.4. TABLE 7.4 DETAILS OF STOCKS A AND B Number of shares outstanding 100 150 Price per share $1.50 $2.00 Expected rate of return 15% 12% Standard deviation of return 15% 9% Stock A Stock B Furthermore, the correlation coefficient between the returns of stocks A and B is PA There is also a risk-free asset, and Simpleland satisfies the CAPM exactly (a) What is the expected rate of return of the market portfolio? (b) What is the standard deviation of the market portfolio? (c) What is the beta of stock A? (d) What is the risk-free rate in Simpleland

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