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Part two: If a simple CAPM is valid, which of the following situations are possible: 1. Portfolio Expected return Beta C 24% 1.3 18% 1.1

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Part two: If a simple CAPM is valid, which of the following situations are possible: 1. Portfolio Expected return Beta C 24% 1.3 18% 1.1 2. Portfolio Expected return Standard deviation A 20% 30% B 30% 20% 3. Portfolio Risk free Expected return Beta 7% 0 Market A 17% 1.5 13% 2 Possible/Not Possible Explanation Situation

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